Fair Valuation

I always wondered why this traded at such a large premium to it's NTA of $3.09. The properties had been valued taking into account the rent reversion, so it always appeared investors were double counting the capital uplift which led to the huge NTA premium.

Additionally, this vehicle has been paying out dividends far in excess of its operating earnings by increasing it's debt levels. It's akin to buying a rental property, earning $10,000 net income from it but distributing yourself $25,000 by drawing down on your debt by a further $15,000. All these yield chasing investors have been fooled by this illusionary "yield" funded by debt which has now led to very high debt levels which may require a capital raise at a steep discount.

Now they are in a substantial pickle.
1. Debt levels are circa 50% of their asset value which is too high.
2. They have a near term debt expiry of half that debt coming up in August when capital markets are not extending credit.
3. They have a fund manager who owns 1/3 of the shares and should they start getting redemptions, selling LEP into this illiquid market will be a nightmare.
4. Pubs are shutdown. This makes a refinance a risk proposition for any funder regardless of who the tenant is, as from my understanding Endeavour is not cross guaranteeing ALH.

No idea why this is still trading at a premium to NTA when Charter Hall Long Wale Reit which has no debt expiry for 3 years, super high quality assets with a 14 year Wale mostly to government tenants is trading at a 20% discount to NTA.

This should be trading at a bigger discount to NTA that CHLW, so I feel this has a long way to go before it becomes good value.