Forum Archive Index - August 2003

["david.gibson" <david.gibson@k.co.nz>]

Just to follow up on the TTP.NZX management fee issue, I'd like to present a
snapshot of my reseach.

>From the cashflow tables of the latest annual reports:

KIP.NZX have a stated rental income of $96,590k.  $15,587k of this is
recharged tenant expenses.  I assume net rental income is of the order of
$81,003k.  Total operating expenses are $16,194k.  Hence about 20% of real
rental income is spent as operating expenses.

TTP.NZX have a stated rental income of $78,119k.  Their operating expense
categories are $12,272k + $4,846k = $17,118k.  Hence about 22% of real
rental income is spent as operating expenses.

KIP.NZX is the "market darling".  TTP.NZX is the "market dog".  The most
commonly used argument is that TTP management fees are too high.  THIS SEEMS
TO ME TO BE A MYTH.

Indeed, I would expect TTP.NZX expenses to be higher as they have an active
development strategy and have had a collection of "non blue chip" properties
to manage.

Now I agree that TTP.NZX has been leveraged higher than KIP.NZX.  Their
portfolio of properties has in the past been a poor second to KIP.NZX.
However, now over 40% of their assets - at $0.57 cents per share - are in
CASH!!

The rate of return on recent development investments has been very pleasing.
They have a conservate development approach - they don't develop until they
can prove a return.

Please, tell me - what I am missing?!?

Someone must agree with me - TTP.NZX has hit $0.37 intra-day.  But 65% of
NTA for assets that are significantly cash is far too low.

Best Rgds
David Gibson


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