Agreed it's undervalued. Hume/Maso/Athos are likely leading the...

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Bailey241

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21/02/23

19:14

Post #: 66379723
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Originally posted by gerling: ↑

With the Sale of 5 Eden park - AOF looks to be undervalued by the market.
Using the Aug-22 presentation as a starting point...
$554M Assets, $182M borrowings = $371.5M net assets, $2.26 per share (based on 164.5M shares on issue).

Fast foward to Feb-23.... $221M of assets sales. my estimate is $340M of property, $40M cash... would still be c. $2.26 per share NTA.
But the kicker is you have reduced gearing to 0, and as per the company accounement they are in a position to pay a return of capital to SH.
They haven't specified the amount, but I'd assume capacity for $80 - $120M, (would leave $40 - 80M of Debt, very comfortable against the assets, very low gearing).

So taking $80M capital return. 50c special dividend. Leaves you with $340M property, 40M debt = $300M net, or $1.81 NTA.
Meanwhile the theoretical Ex div price would be $1.20 ($1.70 - 50c). So significant 34% discount to NTA. With further sales in the pipeline.

Of the remaining assets, I am comfortable with Beenleight (new build, long WALE)< and the ACT asset (given low $/m2, and I like the Canberra market overall). On the others I am mixed. Parramatta already taken a massive haircut, so valuation probably conservative.

Brisbane and St Kilda rd... possibly OK, but low NABERs and valuation doesn't look super cheap, maybe some valuation falls for a sale on these.

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Agreed it's undervalued. Hume/Maso/Athos are likely leading the charge on assets sales and eventual windup following the withdrawn Aliro proposal, so there's a path to realising NTA. Removal of debt decreases the equity sensitivity to revaluations so there should be a lower discount to net assets.

Beenleigh and ACT valuation seem ok, albeit ACT has seen decent cap rate expansion since 2020. Neither property individually moves the needle from here though.

Boeing are vacating Charlotte St in June '24 with 81% of NLA. Valuation has apparently been updated to account for that but will need a buyer comfortable to take on the leasing risk at that price. St Kilda cap rate looks tight - ABP divested the property next door in March '22 at the same cap rate but different market now. Parramatta an empty building and parking lot with a refurb required.

Still a pathway to $2.10 assuming a 10% discount to the property portfolio inclusive of transaction costs = ~23% upside from here.

AOF Price at posting: $1.71 Sentiment: None Disclosure: Not Held
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1 Great analysis

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