ARG - Argosy Property.

[ronaldson]

Well the coalition agreements took us no further regarding deductibility, and any buy-side support has fallen away.

Ex dividend and trading at $1.07 is definitely not inspiring!

[kiwikeith]

They should come out with a valuation update soon. Published one on the 20th April 2023.

[kiwikeith]

26/4/2024, 12:02 pmGENERALArgosy Property Limited (‘Argosy’) today announced that for the 12 months to 31 March 2024, it has recorded a full year portfolio revaluation loss of $111.7 million, a 5.4% decrease on book value. Of this decrease, $50.8 million was recognised in the 30 September 2023 interim result.

Overall cap rates softened by 37 basis points to an average of 6.21% and this was a primary driver in revaluation decreases. By sector, Industrial decreased $51.2 million or 4.8%. The Office portfolio declined by $49.9 million or 6.1%, and Large Format Retail declined by $10.6 million or 5.1%. The portfolio is 8.6% under-rented, excluding market rent on developments. More detail is provided in the appendix to this release. Based on the provisional revaluation announced today, Argosy’s adjusted NTA would be approximately $1.45 per share compared to $1.58 as at 31 March 2023.
The valuations as at 31 March 2024 remain subject to audit by Deloitte and will be confirmed in the financial results to be announced to the market on 22 May 2024.

[ronaldson]

Valuation loss rate increased quite a bit in HY2. We may not have seen the bottom in the Wellington office market in particular yet either.

While we are told about the relationship between sales price of those properties divested and the most recent book valuations there is never any analysis vis a vis the original acquisition price and yield achieved on that during the holding period, and the actual divestment price net of costs, so we holders can see the real outcome achieved on our behalf. I wonder if even Board members actually know.

These companies tend to buy at cyclical highs and then sell at cyclical lows for debt management purposes or even more specious reasons. Does anyone think these entities outperform a traditional buy and hold single or multi property investor over a timeframe of years?

[kiwikeith]

Valuation loss rate increased quite a bit in HY2. We may not have seen the bottom in the Wellington office market in particular yet either.

While we are told about the relationship between sales price of those properties divested and the most recent book valuations there is never any analysis vis a vis the original acquisition price and yield achieved on that during the holding period, and the actual divestment price net of costs, so we holders can see the real outcome achieved on our behalf. I wonder if even Board members actually know.

These companies tend to buy at cyclical highs and then sell at cyclical lows for debt management purposes or even more specious reasons. Does anyone think these entities outperform a traditional buy and hold single or multi property investor over a timeframe of years?

They probably do not outperform a single property investor due to significant overheads. Argosy, for example, has 16 employees earning over $200k a year. A single property investor probably does all the property management activities himself in his spare time. However the listed property companies do provide the benefits of diversification (ie risk spread over several properties), liquidity (ie you can sell your shares in less than 5 minutes) and convenience (ie you wont be phoned up at 8pm on a Friday night to be told the roof is leaking.).

[ronaldson]

Close today at $1.12 after trading as low as $1.075 earlier and mostly below $1.10 all day.

I have noticed that to trade low on market during the day and then at significantly higher (ie by 2 or 3 cents or more) during the close match pricing auction is something of a feature of this stock for some time now, and I don't really understand why when players could pick stock up cheaper without much trouble beforehand.

[SPC]

Normal strategy for a large buyer or insto to lurk in the background and strike on the closing bell. Avoids sellers hiking prices earlier in the trading day. Catch the afternoon napping sellers by surprise.
Probably mopped up those quantities at a range of prices, up to final price at close.

[kiwikeith]

Well Arg comes out with its annual results tomorrow morning. It has already signaled that there will be a $112m property writedown. That is already known by the market so in itself should not move the needle. I guess most retail investors will be most interested on any indications for dividends for the next financial year.

[ronaldson]

Well Arg comes out with its annual results tomorrow morning. It has already signaled that there will be a $112m property writedown. That is already known by the market so in itself should not move the needle. I guess most retail investors will be most interested on any indications for dividends for the next financial year.

True. The loss of the ability to claim depreciation will be impactful so the question is can the dividend be maintained for FY25 (the June quarter payment is still FY24 as far as ARG is concerned), and if not then how much will be offered/suggested. The Board will recognise most holders are seeking income so will try to hold it steady but I noted at least one other property company has already guided lower.