Ann: FY24 Appendix 4E & Annual Report, page-6

Hi Guys,

I've just had a good look through the results and presentation and wanted to note down some thoughts.

When I saw that this was released at the close of market I should for sure we were going to get another really nasty surprise but overall I think this was approximately what was expected.

KEY FIGURES

The NTA now sits at 61 cents (based on today's closing share price of 37 cents we are trading at an eye watering 39.5% NTA discount with a 8.1% fully franked dividend yield). It's important to note that the franking will be temporary and if the fund had just paid out it's operating earnings of 2.5 cents for FY24 we'd have a yield of 6.5% so both the current yield and to a lesser extent the NTA are looking shaky.

The WACR now sits at 6.16% and there was a little bit of bearish commentary on asset prices continuing to fall if the current interest rate environment extends into next year

The portfolio has dropped to 93% occupied with the vacant rental space at Cremorne and this doesn't include the remaining rental guarantee at the ACT property which expires in December. It was great to finally get a little bit of positive news on that front as they've rented out a bit of the vacant space at that property. My figures have it dropping further to around 87% if more tenants aren't secured by the time that guarantee runs out.

Post Artamon sale the gearing sits at 31.6%. Having a look at the covenants we are safe by a mile on the ICR front (2.5 times compared to the covenant at 1.5 times minimum) and looking pretty safe on the LVR front too. As the minimum covenant is 50% and I've got it at 36.5% currently with a further 10 percent fall in asset values (worst case scenario) seeing us move up to a still comfortable 41%


HOME HQ MINORITY STAKE SOLD

This actually surprised me as I was sure we'd have had a market update by now if they managed to get a deal done considering how long it's been in the works for. Unfortunately I just checked the achieved price of 3.3 million and found that we had it on the books at 4.263 million so it's been sold at a 23% percent discount to it's listed value. Considering the overall sentiment towards shopping centres seems to be improving (largely based on how few of them have been built in recent times and growing populations) I'm disappointed they couldn't get close to a market rate.

I'm also a little confused as it says the stake was exchanged for listed securities (but not what company these securities were in) and then in the presentation I read that the proceeds have already been applied to debt reduction so I can only presume whatever listed securities they received were sold immediately.

GENERAL THOUGHTS

I'm trying to resist topping up further because the contrarian in me thinks this is a good old fashioned discounted asset play in an absolutely hated sector of the property market but then it's hard to really see a catalyst for what's going to change the market perception to TOT and result in a rerating.

Reading through the annual report I was reminded once again that TGP received a 2.5 million dollar acquisition fee for a deal that has shredded the NTA and dividend yield and to an even greater extent the share price. The fact that their stake is now sitting at 40% is also reducing the chance of activists getting involved. I would like to do more reading up on the situation at AOF to see whether there are any similarities there that could be applied to some kind of fund wind up.

Would be interested to see what some other holders think.