Hi all,
As per the original title of this thread. Agree that 360's listed entities (TOT and TDI) were one of a select few companies to maintain guidance during the current crisis.
In TOT's case, they maybe got a bit lucky with their loan book maturing at the right time. But bigger picture, is more important, 360 actively moved away from direct real estate in 2018 into commercial debt, digital assets, private equity and better positioned opportunities for these times.
The buyback for all 360 entities makes perfect sense. Most listed business out there is hitting the market with capital raises when share prices have been beaten up (hello SXL!). Would much prefer a company to be BUYING BACK stock at the moment. When TOT is trading at a huge discount to NTA it will be accretive to holders.
Current yield might not be sustainable, as I suspect distributions will be reduced in FY21 as the company looks to reploy cash opportunistically (distressed real estate platforms, convertible notes etc), and away from Debt (which provides immediate cash yield). But my outlook is more medium term, so I am fine if they are only 4-5 cents next year.
The only question mark on this business for me - is around Velocity Property (VP7). 360 took a huge stake in this, and further compounded by loans to VP7. Outlook for luxury property (like VP7 develops) is not that Rosy at the moment, so I am less comfortable with this. However, their entry was attractively prices, and they not control the board - so I will give them some time on this (current share price of VP7 doesn't mean much, it is so illiquid, hard to value).
My three key positives on 360 Capital.
- ROI focussed. made the right call to sell to platforms to Centuria (2017).
Though in the short term Centuria was rewarded, I want a fund manager who is thinking about ROI, not trying to build an empire of billions and billions of FUM (particularly via acquisition). This is why I avoid companies like Cromwell, Centuria... in favour of APN, 360.
- Alignment of interests. Have a 20%+ stake in everything that they do. Hugely important. Because again, it is all too tempting for fund managers to continue on the growth treadmill of acquistion / capital raise, to boost asset mgmt fees. This doesn't help out the unitholders generally.
- Open Mandate. To some, they might seem like cowboys, as they chop and change what they invest in. And it might not fit a uniform mandate of "just commerical real estate". TOT is a good example through IDR, Asia Pacific Data Centres, then into Commerical debt, and a residential development in Gladesville along the way. It was pivotted like a ballerina. However, mgmt has proven itself (IMO) as able to identify and execute on undervalued opportunities. And this is why I back them to outperform in the current market.
Recently, TDI took a punt on a convertible note (which isn't their core business, as they are not a lender) and produced a ripping 115% IRR (helped by FX gains). I am a believer in TDI also, will save for another thread.
Good luck to all holders, if anyone has any perspectives on Velocity Property, please share.
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