Directors buying with conviction!, page-78

Having followed BLA, BIG, GSW, AXL, QIN and others, I hope that this stock does return to BAU because of the harm it does to individuals when the actions of management cause a company to end up worthless - whether exposed by short-sellers (BLA, QIN - as should only happen in a free market), journalists (BIG, GSW) or because the company just couldn't sustain it's operations anymore (AXL).

You are right to warn about directors and I would add:

- I have seen criticism before of RFF particularly of their model of a non-controlled but related party management company extracting management charges, a uniquely Australian invention which was refined to an art form by Macquarie and Babcock & Brown. Perhaps 1% of total assets is an appropriate management charge, but if the true cost to the management company is only 0.1%, do unitholders have any redress for being overcharged 10x for the services of the management company, thus reducing their own distributions?
- If you support the stock, and whether you agree with short-selling or not, the last 12 months has seen RFF trade at a significant premium to its NTA. AREITs generally trade at around NTA, so now that the share price has adjusted to levels much closer than this, long term holders reinvesting their distributions are doing so at a much more sensible REIT valuation.
- As a former auditor, the emphasis and reliance on PwC by management is concerning. Any audit report tells you that the primary responsibility for preparing accounts rests with management, as does the Corporations Law. Auditors only provide a level of assurance on the accounts after performing some testing. The fact that a formatting error caused an $8,000 loan balance to be shown as a $14 million balance - and that no one at the company or the auditors picked this up until six months after the accounts had been filed with ASIC and ASX - doesn't instill confidence in the precision applied to the rest.

In the interests of disclosure, a former RFF holder who sold out 12 months ago for the reasons of the relationship to the management company and premium to NTA.