Pfi

[troyvdh]

This company has retuned 8.98 % pa since inception (compounding return no idea) which I believe was in the late 90's.
Anyways the latest 1-12 shares at 1.44 appeared to me at least as being a little miserly.....I believe about 66 % took advantage I believe...and I believe that all directors accepted same....which means I suppose that Mr Masfen stumped up at least $320k (?)...

On reflection...me thinks I should have invested only in PFI over the last 2 3 decades...just saying.....

guilty of ramping ..probably....

[Lewylewylewy]

Not sure where the rest of the PFI forum is... Anywho...

Anyone know whats going on with PFI these days? Price increasing, 20 people trying to buy and only 2 sellers with not much to sell...

Is there some news expected or are shareholders just content?

[Lewylewylewy]

Oop there it is... Revaluation

[Deej5]

I have always liked this stock. Up nearly 15% this year with good divies. My entry in this years stock picking comp included PFI and was the only entry to do so.

[Snoopy]

From post 1297 on the KPG thread.

Industrial property is still in great demand because its a growth industry in massive demand and supply constrained. Cap rates on industrial property are at 100 year lows, I see their portfolio at just 4.4%. I am confident that will be the last revaluation PFI investors will see. This is also reflected in the share price being below the new NTA of $3.03 despite PFI's excellent track record. I put it to you that the market is often far more forward looking than either you or I give it credit for. 90% of that gain in NTA was due to a huge move down in capitalization rates...obviously that ~ 80 cent gain in NTA resulting is reversible when cap rates firm up again. Its probably also worth noting that those cap rates were as per valuation in December 2021. A lot has happened in the market since then including inflation numbers here and overseas that were shocking and higher interest rates.

In terms of capital preservation...I believe for the foreseeable future investors in all REIT's are skating on very thin ice.

From AR2021 (that is the one issued in February 2002) P61:

Valuation of Investment Properties at EOFY2021: $2,158.940m
Valuation of investment Properties at EOFY2020: $1,524.785m

=> Average over year FY2021 = ($2,158.94m+$1,524.785m)/2 = $1,841.9m

SNOOPY

[Recaster]

My basic recast analysis of this company may be of interest:

https://recastinvestor.substack.com/...y-for-industry

[Snoopy]

My basic recast analysis of this company may be of interest:

https://recastinvestor.substack.com/...y-for-industry

Nice bit of work there Recaster. I hope you don't mind me echoing part of your conclusion:

"The company has a great balance sheet but it relies on unrealised revaluations of its properties over the years to create it."
"The company is liquid and financially sound with regard to cash flows and profits."
"One day there may be a correction in commercial property prices but the company is pretty conservative in everything except its massive revaluations."

Given Beagles 'warning' that I quoted in my previous post, I think the day of commercial property correction you refer to may already be upon us. It is just that the property companies have not reported it yet.

Yet the price of PFI since 31st December has not plunged (well OK it is down a bit from $2.98 to $2.71, as the market has fallen a similar amount). But even if the price of underlying assets does plunge, what does that matter? It isn't as if PFI is planning a wholesale sell down of their portfolio. So if values fall but there is no pressure to sell, what difference does it make? As you have said yourself, the company is financially sound with regards to cashflows, with 100% of properties tenanted.

I am inclined to think 'forget about the property valuations'. Focus on the cashflows only.

SNOOPY

discl: do not hold

[Snoopy]

I am inclined to think 'forget about the property valuations'. Focus on the cashflows only.

One more comment on property revaluations. I found this little gem nestled inside note 2.1 in AR2021, on the subject of the capitalised valuation approach to property valuation. 'Capitalised valuation' is an approach that takes a predicted future 'rent yield' and derives a capital value based on that rent income value'

"When calculating the direct capitalisation approach, the market rental has a strong interrelationship with the adopted market capitalisation rate given the methodology involves assessing the total market rental income receivable from the property and capitalising this in perpetuity to derive a capital value. In theory, an increase in the market rent and an increase in the adopted market capitalisation rate could potentially offset the impact to the fair value. The same can be said for a decrease in the market rent and a decrease in the adopted market capitalisation rate. A directionally opposite change in the market rent and the adopted market capitalisation rate could potentially magnify the impact to the fair value."

Translation (well, my take on what this means)

PFI has a 100% tenanted property portfolio. The weighted average lease term is 6.7 years.

From AR2021 p4
"Despite lockdown pressures, the strength of our tenant base meant that there was a low level of deferrals and abatement through the year."

Furthermore, I had a look in the annual report 2021 for the term 'default' and 'bad' (as in loan or debt) and found nothing. Dig into the AR financial reporting notes under section 2.3, and we find the 'rent deferred and abated' over the year was $0.366m. Compared to the $92.271m of rent received this represents a default rate of:

$0.366m / $92.271m = 0.4%

With rents locked in, and probably ratcheted to inflation, a strong tenant base and minimal rent defaults, I think there is an argument to be made that the property valuations of recent times will stick, and not drop.

SNOOPY

[Sideshow Bob]

Buyback

PFI Share Buyback Programme to Commence - NZX, New Zealand’s Exchange

roperty for Industry Limited (PFI or the Company) advises that it will commence an on-market share buyback programme on Tuesday, 31 May 2022.
PFI’s Chair, Anthony Beverley, noted “As outlined at PFI’s recent annual meeting, at year end PFI’s balance sheet was strong. PFI’s net tangible assets were 303.4 cents per share, a significant premium to PFI’s current share price. Based on the information we’ve received from valuers to date, despite rising interest rates and the potential implications on the wider property market and on the basis we don’t experience a significant deterioration in economic and market conditions, we are not anticipating any material change in valuations for the upcoming half year results.”

[Snoopy]

From AR2021 (that is the one issued in February 2022) P61:

Valuation of Investment Properties at EOFY2021: $2,158.940m
Valuation of investment Properties at EOFY2020: $1,524.785m

=> Average over year FY2021 = ($2,158.940m+$1,524.785m)/2 = $1,841.9m

From AR2022 (that is the one issued in February 2023) p61:

Valuation of Investment Properties at EOFY2021: $2,158.940m
Valuation of investment Properties at EOFY2022: $2,096.200m

=> Average over year FY2022 = ($2,158.940m+$2,096.200m)/2 = $2,127.6m

SNOOPY