agm & thoughts

Thakral’s AGM’s are always informative, low key events. Today’s confirms my perception that this is a quality company who’ve acted proactively in the downturn, avoided dilution and who’ll progressively pay down debt via selective asset sales and from operating cashflow. Operating in a tough environment but leaning down the operation to match. Some risk with the debt but more than offset by the huge discount, to the already slashed NAV, imo.

I especially like it because the hotels must be depreciated, so the cashflow is always greater than the reported operating profit (as opposed to property investment co’s that don’t deduct any depreciation).

They’re so low key they don’t appear to have reported anything re this interesting article in the Gold Coast Bulletin yesterday:

Yesterday (17/11/09) Thakrals 1.2 hectare full city block development (Budds Beach – next to Broad Beach) was approved by the council planning committee for a 5-star development of two tower blocks of 53 and 30 storeys (238 hotel suites, 327 apartments). Bruce Fisher, the US architect was flown over to present to the meeting.

This has been on the go for a while and has taken 2 years of planning and architectural work. It’ll cost $800m so not a snowballs chance in hell of being build anytime soon (they will want significant presales on the apartments), but still a good result. Think it still needs ratification by the full council.

And possible valuation upside. According to the paper the land was partly designated for use as a community centre. To compensate, Thakral will donate (transfer ownership) of 250sqm of floor area for council use.

Whenever this cycle turns, they’ll be in a strong position for rapid construction. The sector is out of favour, at a 44% discount to the lowered NAV, and few posts on HC. So no hype in the price and just what I like as a medium term holder. Been buying more.