Analyst Analysis, page-3

HI Gerling,

Nice to have some company on this forum! I agree with much of what you've posted - and you've given me some things to think about too. A few comments:

The good ...
- 1) Agree. However downside is that with tight holdings the stock is quite illiquid for its size.
- 2) Agree. IMO they're very disciplined in ensuring their property purchases meet investment metrics. They've made good decisions and will sell whole trusts or individual properties if/when it makes sense commercially. Hence, I'd add to your point that they take advantage of the laziness of those larger REIT's to opportunistically sell them properties or or trusts.
- 3) I'd add ... they will return cash when excess to medium term needs - as they did with the massive dividend a couple of years ago. So ... by not returning it at the moment, I think they're indicating that they have a pipeline of deals that they're working on.

Also I'd add a 5)
- 5) They're focussed on industrial and commercial properties rather than shopping centres or housing development. I'm avoiding these areas of property due to downside risks. When they have seen value and bought properties within their trusts, this has been well received by their trust holders who've taken up share offers, eg. API when they APD bought the Westrack HQ for the trust on good yields.

The less good ...
A. - I need to look into.
B. - At 44c agree it's cheap (IMO should be 10-20% higher). The yield looks low in the sector as APD is a company paying franked divs and I think this may be holding the SP down. Another reason may be retail investors looking at the SP graph and not realising the big fall a couple of years back was due to the massive special dividend. On upside, may get more interest when converts to trust and pays higher (but unfranked) distributions or spends its cash by seeding a new trust.
C. I'm not too concerned with excess cash and people as I think they've shown they can put this to good use + have form returning it when they think they have excess.
D. IMO Index funds aren't a threat - as they would have to buy some ADI and maybe some APD. All an index fund does is add a small cost on top of the listed assets (as they're not managers of properties). They've discussed in some pressos about limited properties meeting their investment parameters ... hence not buying. I think this reflects their disciplined approach - so happy. Note: I intitially bought a parcel of ADI (that I still hold) but since bought APD as I feel better value and higher growth whilst still backed by property assets.