Let's take a closer look at the borrowing / interest servicing monkey being carried by NZL
also capital movements / issues to ALF for Fees to Management company:
The movement between 2022 accounts & NZX Issued shares appears to be all the Performance
Fee due to ALF associate Management Company which has taken shares (@ $1.65 apiece) in early Sep 2022 so a large impairment now on those 2.5 million shares needs to be booked by ALF & Associates *, currently out the back door by $1.425 m (* depending on whether 50/50 or 100% owned at that time)
Ultimately no new shares issued for direct cash inflow since the Accounts in 2022 issued
Looking at Borrowings -
2021 Year $54.254 million Borrowings outstanding - Ave Interest cost 2.29% at year end - Annualised cost of
Interest $ 1.24 m
2021 Accounts comparatives reported Lease revenue of $498 K for 2021 year or part thereof
2022 Year $100.768 million Borrowings outstanding - Ave Interest cost 3.998% at year end - Annualised cost of
Interest $ 4.03 m
2022 Accounts comparatives reported Lease revenue of $8.215 m for 2022 year or part thereof and possibly
properties acquired mid late through the year
Looking forward - Interest rates 2021 Average 2.29% 2022 Average 3.998%
Next rollovers for borrowings are going to see considerably higher average rate than 4.0%
Some properties acquired have call options allowing for vendor to repurchase + a margin, but if things
get considerably tighter pushing firesale conditions with hefty interest rates that may be of no
assistance with the buy back options are not exercised
ALF will already be seeing an impairment to market on it's NZL shareholdings and there is risk
if things get tighter even a share swap for performance fees owed may not be most
prudent move if it results in further impairment on a SP continuing it's run downwards
with more red needed to be provided for.
Racking up increased holding & not seeing cash for Management Company Revenues
may also not be most prudent view either in terms of ALF .
Stacking the deck of cards at outset on projections is one thing, but the same structuring
needs to be fit for purpose no matter what the ensuing conditions bring, otherwise the
stack may be at risk of toppling over or showing signs of serious wilting
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