P/plus and Freespins - Good posts and interesting reading.I...

P/plus and Freespins - Good posts and interesting reading.
I agree that, in time, the REIT will come back into favour.
I believe that there are REITs and there are REITs.
- LLP is different to other REITs.
- It is different to PTN also.
- The market I think, is classifying LLP as an REIT, whereas it is really a business - with real estate assets.
- It manages its own business.
- It is a real, tangible business.
- It has tangible, hard core assets (real estate).
- it has good, experienced management.
- It has a big, cashed-up anchor s/h in LLC with $1,300m of cash and v experienced mgt.
- Gearing (excl C/n) is only about 28% - that's mighty low.
NTA is still about 29c p/s.
- Its business model is working, and is cash flow positive (except for C/N interest).
- Its market is GROWING - it is probably one of the best markets to be in, because we are ALL getting older, and the % of aged persons in Aust is growing quite dramatically.

I think the issue of property re-valuations is a red herring. Its only real significance occurs if LLP wants to sell those assets (which it doesn't) or in relation to banking covenants. The covenants are really not much of an issue, because the banks won't call in the loan if LLP is paying its interest etc - the banks will just screw them for fees and higher interest.

Once the home sales market picks up, and the over 55's can sell their homes, then the demand for retirement units will resume - that's all that is lacking. Surely the Home Owners grant will have boosted the churn of housing?

Share Dumping:
my understanding is that a big insto has been unloading their holding as its non-core. It appears that the selling has finished as the LLP sp seems to have stabilised. I could go check out the register to confirm, but am too slack to do it.

PTN and Managed Properties:
PTN and LLP seem to have been at odds over the leased assets for some time. The arguements seem to stem from the interpretation of the lease agreements.
PTN has now put up for sale those assets managed by LLP. LLp have long-term leases over those assets, for which they paid significant lease premiums. Should PTN sell those assets then the purchaser buys them with the Mgt Agreements in place, or comes to a deal with LLP.
Reading between the lines, LLP may well be better-off without those managed assets. If PTN or purchaser pay out those leases, then LLP can apply those funds to debt or C/N, or use the funds to develop other villages.

There is some sort of structural/capital reorganisation coming - eg abolition of stapled securities - thus we may become a simpler operating entity- not a trust.

LLp is contemplating resuming dividends for the calendar year ending 2010 - so to me this says operating cash flows are looking good.

LLC have invested (what $250m??) in LLP. LLC will want to get a return on that investment. They will get that return from: (1) sale of developments from their Retirement Division to LLP at independent valuations (2)interest of c/n (3) dividends.

Management:
A while ago I had the opportunity to listen to the CEO of LLP speak, and I was really impressed with his grasp of the business. P/Plus- you have raised some really good points in your posts, and I would be keen to hear LLp's responses to those points - the CEO is really approachable and will speak directly to s/h. If you do contact him, I would be greatful if you might share any info on HC.

To me, LLP shares should be put in bottom drawer for a while - I look at this investment as "buying straw hats in winter".

cheers
Jake