Historically APZ has been a geat destroyer of value. It lacked a simple strategy and appears to me to have chased the latest fad going into ventures at poor prices. It had retail development syndicates to which it lent funds at high interest, a venture into a mining accomodation village at around the peak of the boom, over exposure to Perth at the wrong time and a more recent large investment in developing the ATO bldg in SA. All of these eventually required write downs (or failed to earn a decent return). It is these continual write downs (done over several years) which resulted in losses in the statutory accounts. In contrast the rental and interest income from the loans got distributed to unitholders. But distributing interest income on loans which actually never got collected because it got written off is pretty rank.
Currently it has reformed, simplified its business and is largely an entity owning camping parks which it is in the process of building up into its portfolio. These yield good returns and enable distributions to be quite high. Though right at the moment they have quite a lot of cash in the fund which will be earning almost nothing. The danger for unitholders is if APZ pays silly prices to add to its holdings of camping parks. If so, then we will have high distributions (from the camping park rentals) coupled with write downs (from the value of the parks if they have overpaid) which show as losses in the statutory accounts. In other words history repeats. Hopefully this won't occur with the current management. The prices they have paid so far look fair to me.
Look at a long term chart for APZ. Atrocious but worms do occasionally turn. If so APZ may increase to nearer NAV.
APZ Price at posting:
$1.10 Sentiment: None Disclosure: Held
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