Ann: Response to Media Article, page-2

It's going on for 6 weeks since the company disclosed the talks with Jasper Property Group.

Jasper's NZ$230m (A$200m) of AUM would make for a relatively easy-to-digest bite for ENN considering ENN's $2.4bn AUM.  

I've spent some time doing some research on who, and what, Jasper is, and it looks to be a credible outfit.

As always when it comes to shareholder value creation, the devil is in the detail in terms of how much ENN ends up paying for Jasper, should a deal be consummated.

The good news is that events in equity markets over the past several weeks will serve to moderate the expectations of the vendor in the discussions.

I suspect the market might be a bit wary about ENN needing to raise equity capital to fund an acquisition, but I'm not so sure about that given the company had almost $45m access to capital ($9m in cash and $35m in undrawn debt).

But we won't die waiting to get a feel of management's thinking about capital management, because the distribution for 2H2022 will be announced next week.

If last year's distribution (7.1cps) is matched (and who knows what it could be because there would have been far higher levels of distributions received from the group's co-investment holdings in the various funds (esp. the Hotel, Tourism and Leisure funds post-Covid)),  then added to the 9.1cps distribution for 1H2022, it would mean a 12-month trailing distribution of 16.2c.

Which is a 9.4% distribution yield.

And that for a business with the following management fee [*] growth trajectory:

1H2019:  $4.8m
2H2019: $5.3m
1H2020: $5.7m
2H2020:  $8.0m
1H2021:  $9.4m
2H2021:  $9.3m
1H2022:  $12.4m


[*]   And that excludes Performance fees, and Acquisition, Leasing and Development fees which - while lumpy - collectively amounted to almost 60% of the base management fees, so they shouldn't be ignored:




That picture looks to this little chipmunk most decidedly not like one that belongs to a business that is being offered for sale on a 9.4% distribution yield.

Either the distribution is wrong (very wrong) or the company is being valued wrongly by the market.

.

.