# PTN - Prime Retirement and Age Care Property Trust



## RustyK (4 December 2007)

Hi There,

I have pasted some interesting research below regarding PTN.  I was wondering if anyone else had any thoughts on this one?  It looks good to me with the ageing population and lack of accomodation.  Trading at a discount to its Net Tangible Assets.


*Prime Retirement and Age Care Property Trust        (PTN)        $0. 86 
Recommendation: BUY     * 

FKP Property Group and Macquarie Capital Funds have emerged as the largest retirement village providers in Australasia following the acquisition of Zig Inge Group for $641 million. The acquisition implies a EBITDA multiple of 24x. 
Impact
·  If we imply the same multiple to our FY08 estimates for PTN the resulting valuation is $2.61. We believe however, that the Zig Ing transaction was overpriced, reflecting the strong interest in the market and the strategic position the acquisition provides. If we instead apply the average consensus multiple used for valuing Becton's retirement business this implies a valuation for PTN of $1.22. 
·  Our price target based on NTA and DCF remains $1.04. 
·  At $0.86 PTN offers a very high 10% yield and 16% discount to NTA and so is very cheap. 
·  While we are cautious about the risk of underlying income (DMF / development) relative to standard non-stapled LPT's, PTN is very insulated from some of the current macro events at play at the moment. It has no currency risk, low gearing (12%), no sub prime, and very little risk of the NTA falling. 
·  We believe the recent share price underperformance is a result of original retail investors being scared off by the recent LPT sector underperformance and taking the opportunity to exit now that they have a liquidity mechanism via the trust being listed. 
·  We maintain our BUY recommendation and believe this is an opportune time to get on board.

Disclosure:  Patersons Securities Ltd acted as Broker to the Offer to the IPO that raised $100,000,000 through the issue of 100,000,000 shares at $1.00 per share for The Prime Retirement and Aged Care Property Trust in August 2007. It received a fee for this service.


Any Thoughts???


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## PortfolioPlus (20 December 2007)

I agree with Patersons summary. 

Having studied PTN closely it offers a healthy discount to NTA (current price around 84 cents and NTA of $1.02)and the underlying security is bricks and mortar. Plus the revenue streams are largely rents ($50,038 in 08) which are supported by CPI increases. 

The other projected income in 08 is $25,895 in development revenue but the sales to date are very encouraging (T'ville Mackay and Gold Coast).   

External debt is only $342m and free cash flow after interest should be around $45,252.

And...Dividends are paid quarterly with a min of 8.5 cents (fully tax deferred) on a $1 share which is presently priced at 84 cents. 

My thought is that, given that it only listed in early July, it is flying below the institutional radar screen. That said it has enjoyed a good track record with past distributions for the last 4 years at of around 9.4%.

And the main shareholder (Bill Ludewici??) continues to buy up big.

As I see it the main questions to keep asking are these:

Is the average rollover rate of RGP holding up as per prospectus?
Are they on track with developments at Helensvale, Townsville and Mackay?
Are the englobo sales at Lilydale Valley, Greenleaf Belmont and Greeenleaf Wyree Point happening?

But do your own sums and draw your own conclusions.


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## PortfolioPlus (26 February 2008)

Well I'm puzzled. The market is an ass! Cop this:

Two companies (largely the same size and business focus) report 1H results within a day of each other.

One company (BBC) has a share price surge of 12.5% largely as a result of "insto" support. The other (Prime Trust PTN) barely has a price move at all and certainly no institutional support. 

Surely its logical to assume the market should reward the company with the best results...but it doesn't. 

Let's compare the 1H results
                                               BBC                         PTN  
Shares/Units                              651.7m                     553.8m
Current share/unit price                  63 cents                   69.5 cents  
NTA                                          $0.59                       $1.05
EPS                                          3.2 cents                  11.65 cents
1H Distribution                            4.2 cents                    4.2 cents

Both companies claim that are on track to deliver on FY08 results although PTN is further advanced in meeting this promise than BBC.

Actual 1H results were as follows:

EBITDA                                     $44.1m                     $56.2m
NPAT                                        $18.2m                     $47.1m

So, now I'm thinking, maybe the instos are knocking PTN because of debt exposure...but no, it can't. Here are the figures:

Gearing                                      38%                          29.5%

Neither company has any short term debt rollover of signifcance at all.


I just cannot explain why PTN is not seen as the better bet by the instos. What am I missing or should I start with a a Insto mentality of "it's not my money" and let's talk about the market over a Jack Daniels at lunch; put our hunches into play mid afternoon before a high-ball at 5.


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## ROE (26 February 2008)

BBC is backed by an investment bank  that said it all.

Don't worry about it man.. if you think PTN is a better stock then stick with it
A good stock rarely geso un-recognized by the market for long.

The market eventually catches up.

Having said that I dont know much about the 2 stocks and I dont hold or intend to hold of either stocks.


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## Logique (27 February 2008)

I'm hearing you PP, and what ROE said about it BBC being B & B backed would carry a lot of weight. 

But there's another thing of the respective charts. The instos might be interpreting a potential turnaround in BBC, while in comparison PTN with it's short history looks entrenched in a downtrend, they are worried about where the bottom is.  But all the same I go along with what ROE said.


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## hartley (27 February 2008)

I talked to my accountant friend about this and he mentioned something about NTA being revalued at +54million (or thereabouts) recently, which may mean the NTA of 1.04/share is overvalued, any comments?

I do like the looks of this stock on paper, and sorry about the lack of substance, i'll look into it when i'm not at work.


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## hartley (28 February 2008)

Seems they only revalued from 1.00 to 1.05, not a huge change (relative to the 67.5c Offer), though property valuations increasing recently does raise slight suspicion.

Either way, looks like a good buy to me based on NTA alone, couple that with a first half distribution of 4.2c (>10% div at this price) and you've got an attractive stock for my money - though unfortunately it is tied up elsewhere.


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## ROE (28 February 2008)

Be careful about NTA. I think I post on this forum some where on this forum about using NTA .. NTA has evolved from good old day to what it is today so be careful


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## Logique (28 February 2008)

The company have confirmed their forward distribution guidance at 2.1c per quarter. Shares currently at 65c, which is well under the NTA of 1.05 (thanks hartley) gives 12.9% annualised and tax deferred yield.  The next quarterly distribution of 2.1c is payable to holders at the end of March, so I had a little nibble at it this afternoon. My broker allows 60% LVR on it too.


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## Logique (28 February 2008)

There is a necessary qualification to my statement above. The company have confirmed quarterly distributions, and 4.2c total for the half year to date. Not quite the same thing as forward guidance, however confident they seem.


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## PortfolioPlus (29 February 2008)

Accept your suggestion ROE and its times like these that you've got to have a steely nerve when you're somewhat contrarian. As Buffett said "when the market is greedy you be fearful; but when the market is fearful it's time to be greedy." 

I feel comfortable with the underlying factors of this company (despite more falls yesterday and despite the high management fee struture).

As to NTA...yep, accept your suggestion that it isn't everything...but its bloody comforting when you buy a $1.05 asset (which is genuine bricks and mortar) for about 67 cents.

Digging deeper with this company...the majority of their profit for the quarter was as a result of property revaluations but this is an acceptable accounting standard these days. It will be interesting to see what happens when property prices fall! Because of timing differences and adverse weather conditions their development program hasn't booked profits on sales in this half....but they're there... I checked around. It's amazing what info you can get when you just phone a building site office!

I really think the instos and the market in general has got spooked by the credit crisis. PTN has gearing at just 29.5% with no major refinancings in the immediate future. They can ride high in the saddle with dry feet.

So too can say FKP which released its half yearly figures yesterday and got slammed...despite stating publicly that their debts had all been re-negotiated and just $14 million will be a current liability as of June 30...this for a billion dollar plus company. My belief is that Directors take a second, third and fourth look at Public Releases these days because the ambulance-chasers are just waiting to pounce with massive claims, against individuals as well. That doesn't mean I think they are altar boys either...if they could get away with a porky-pie they would, no doubt. 


Anyway...I'm going to sit tight and wait.


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## RustyK (16 April 2008)

I think PTN's share price performance of lack there of is just a product of a share market that is bashing listed property trusts all over the place.  BBC and FKP are in the same market and have experienced share price falls of a similar nature.  I expect that the share price will remain depressed for as long as 12 months until the sub prime crisis in the US starts to subside and confidence returns in the sector.  On that note I am going to take the opportunity to accumulate more stock when ever it punches below 60 cents.   A 14% fully tax deferred yield at that price is pretty hard to argue with.  The company will be valued close to NTA at some stage in the future and even at 90 cents which is a 15% discount to NTA it is a 50% capital gain.

I am in no rush it is as Mr Buffet says it is very hard to buy something that is already popular and make good returns.

These are my thoughts only DYOR. 

Cheers


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## PortfolioPlus (18 April 2008)

I agree RustyK. I checked my bank account this morning and there it was...regular as clockwork...my 2.1cent quarterly dividend.

And to quote more from Buffett, the value of a business has nothing to do with market sentiment and everything to do with the discounted value of future income flows.

When you can acquire $1.05 in bricks and mortar assets for just 53.5 cents plus get a regular quarterly dividend approximating 15.9% fully tax deferred...come on...where can you duplicate this?

I'd be v surprised if a lot of retirees wouldn't want to invest here just to underwrite their lifestyle. 16% no tax...wow!


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## Logique (19 April 2008)

PP,
mate sssh, while we accumulate. I also noticed the March dividend turned up in my account. Very tidy on the initial investment. All the peer group in this sector look ripe for the picking to me, but none with better investor return numbers than this one. 

With the overall markets the bears will be starting to feel nervous, the consolidation at these levels is strong, so I'm not sure that Rusty's depressed for as long as 12mths comment is one I completely go along with. One thing I am sure of is that in years to come there will be an increasing tide of seniors clamouring to pay us a cpi indexed stream of rents.


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## imajica (30 April 2008)

just bought in today.

reasons:

- almost 14% yield - fully franked divvies paid quarterly

- current share price 61c - underlying asset value over $1

- management have recenly got rid of 'dead wood' and this will make the company more desirable to the instos - the second half of the year as stated in their recent report is where a majority of earnings growth is to be found - this will hopefully result in share price appreciation - this and a 14% yield - what more could one ask for?


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## JTLP (30 April 2008)

Hi Imajica,

When you say got rid of "Dead Wood" what do you mean?

Also, where can you find out all the financial info about divvi and debt etc?

Thanks 

jtc


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## imajica (30 April 2008)

http://www.primetrust.com.au/www/124/1001127/displayarticle/1001171.html


have a read of the most recent announcement on this page.

provides details regarding the yield/divvies etc

also mentions the restructuring of the organisation.


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## RustyK (2 May 2008)

With respect to the restructure of the organisation this will make them a lot more attractive to the institutions and also in a better position to be taken over from the likes of a Macquarie Group.

It is also very interesting to note the difference in the buy / sell ratio.  Sellers have outnumbered buyers in PTN at about 7 or 8 to 1 over the past few months and all of a sudden we are pushing towards parity.  Sellers have dried up and buyers are entering the market.

Of course I could be wrong and it would not be the first or the last time.

Cheers


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## PortfolioPlus (5 May 2008)

Agree with your summary RustyK...plus take into consideration that the new CEO is from an experienced merger and acquisition background and stated openly in the announcment that he will position PTN for both of these eventualities. 

You don't need to be the sharpest tool in the shed to realise that right now this fragmented industry is been consolidated in much the same way as Bunnings consolidated the hardware industry.

Yep, the big players are buying out the "mums and dads" and PTN is one of the big players which has quality holdings in strategically important areas of demand...notably Queensland.


Get in before the institutions start taking their positions in PTN....and they will once it cracks the ASX200 club. Currently they are being blindsided by making investments in BBC, a Babcock and Brown supported company, which is a poorer quality asset with a far less NTA. Just put the PTN and BBC charts together and you will see what I mean...you might also then tell me why some instos are investing in BBC and not PTN.


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## prawn_86 (22 May 2008)

I really cant make my mind up about these guys. They are on my watchlist, but at the moment the plusses and minuses are weighing each other out so i'll just continue to watch until it goes one way or another in my mind.

*Positives:*
>14% dividend yeild
Growth Sector
Trading well below NTA
Low gearing
New management


*Negatives:*
Profits come almost solely from revaluations
They are not making enough cash to cover distributions
No real indication that they can make it consistently profitable (without revaluations)
Technical downtrend with 50c the next target now 60c has been broken


Watching with much interest


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## hartley (2 June 2008)

Mmm I agree prawn, I feel like it's one of those stocks you put 10% of your portfolio in and forget about for 5 years. Unfortunately I'm too impatient for that and sold out recently for more volatile stocks. 

I think your signature says it all
"so many stocks ... so little capital"


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## DionM (25 June 2008)

I've had PTN on my watchlist since it was $1+.

Lack of capital prevented me from hopping on.

Closed yesterday 47c.  Not that I like picking bottoms but that is cheap!

prawn_86 wrote:


> They are not making enough cash to cover distributions




Going on from this, the balance sheet intrigues me.

-$53m of their $71m income last half-year was from revaluations.   
- They have $1.4b of property and 154m in cash (total assets of 1.6b).
- They have $1b in liabilities ... mostly $400m in loans and $660m in "payables to residents" - what is "payables to residents", exactly?


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## DionM (25 June 2008)

Okay, it appears that "payables to residents" is money given to PTN by residents to "own" a property, and then when they leave they (residents) get the money back less some fees.

I'm trying to work out where the other part of the story is then, if this is money received by PTN that is to be paid back - where is it kept on the balance sheet (i.e. if they received that 600m, what did they do with it to balance this liability they now have?).  I'm guessing it is (partly) the source of the $154m cash (which derives the 5m interest income).  And the rest has gone on acquisitions/asset purchase I guess.

So in effect, they (PTN) are treating it as another source of debt.  

This also leads me to wonder - is the debt/asset ratio thus 400m/1.4b (~30%) or is it really (400m+660m)/1.4b (~71%)?

To take the story to the next level, their management fees were 2m at Dec 06, but nil Dec 07?  And Sundries income has gone from 75k to 2m?

"I want to believe" but this is concerning.  6-8mths ago I would have just plonked my money down, but since I've lost so much of that money (on paper) due to debt issues, I pay more attention to financials these days (and less on dividends/growth potential than I used to).


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## prawn_86 (25 June 2008)

Hey Dion,

I agree, on the surface it looks interesting, but once you start digging then it doesnt look as good.

Its also worth noting that they have not confirmed the dividend for next year, stating something along the lines of "at the end of 2008 a review of our dividend will be carried out". That to me means to be ready to not recieve one next year...


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## DionM (25 June 2008)

prawn_86 said:


> Hey Dion,
> 
> I agree, on the surface it looks interesting, but once you start digging then it doesnt look as good.
> 
> Its also worth noting that they have not confirmed the dividend for next year, stating something along the lines of "at the end of 2008 a review of our dividend will be carried out". That to me means to be ready to not recieve one next year...




Correct about divvides.  They pay quarterly and have said they will release guidance on the next one in a few weeks, I might wait for that.  

I've been burnt with ZFX (severe drop in divvies) and BBP (none!) so I am always cautious about dividends and their stability now ...


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## Gunlom (25 June 2008)

What does everyone think of the fact that Lend Lease has lobbed a bid at FKP property last week, and today it has announced that it has acquired a 6% stake in BBC, both major players in the retirement property market.

Whats the chance of this lifting PTN as well?? 

the interest in the industry is good? hopefully the increased interest will settle the SP, although I agree the in depth finances of PTN is abit worrying. Although this industry is set to boom over the next decade as the baby boomers retire, I guess it's just the problem of finding a quality company to invest in!!


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## alfaracing (26 June 2008)

I've had ptn since they listed, yes i'm in the red.
I believe this stock is good for the long term. Good quarterly dividends, low gearing, lot of new buildings to fill, and lots more people ageing.

Cheap


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## prawn_86 (26 June 2008)

alfaracing said:


> I've had ptn since they listed, yes i'm in the red.
> I believe this stock is good for the long term. Good quarterly dividends, low gearing, lot of new buildings to fill, and lots more people ageing.
> 
> Cheap




What about the fact their profits come from re-valuations, the dividend is not guaranteed going forward, and their gearing level may be suspect as DionM pointed out.

I would agree they are cheap if they could prove they can be profitable without revaluations...


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## alfaracing (31 July 2008)

prawn_86 said:


> What about the fact their profits come from re-valuations, the dividend is not guaranteed going forward, and their gearing level may be suspect as DionM pointed out.
> 
> I would agree they are cheap if they could prove they can be profitable without revaluations...




Hi Prawn
Is it such a bad thing that they are showing "profits" coming from valuations, after all they are in the property market? eg the valuation will reflect the income they make on the retirement property position. Hope the dividend doesn't drop?? but i'm trying to look at this as the icing on the cake. Gearing thing....mmm. I may need to take this up with my f/adviser.

like i said, in for long term on this one


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## ROE (31 July 2008)

alfaracing said:


> Hi Prawn
> Is it such a bad thing that they are showing "profits" coming from valuations, after all they are in the property market? eg the valuation will reflect the income they make on the retirement property position. Hope the dividend doesn't drop?? but i'm trying to look at this as the icing on the cake. Gearing thing....mmm. I may need to take this up with my f/adviser.
> 
> like i said, in for long term on this one





Yes it a bad thing counting profit from revaluation ... look what's doing to the property trust sectors... and all the infrastructural funds.

Basically you counting money you have on paper but not on hand...shall I say asset rich cash poor... but you need cash to pay dividend and since you dont have cash so you borrow and that will wiped out your revaluation value because now you got more debt... then bang comes asset price drop.. you got no cash and you got little asset and lot of debt 

what follows is up to the market to punish 

Anything that follow this model I stay the hell away.. all Macbank funds, all BNB funds, some property trusts etc.. and this too


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## Logique (1 August 2008)

Yes PTN sits in a sector that is being punished for this model, with property trust peer group companies with either past shock annoucements like Centro, or are having trouble breaking out of downtrends like BBC, AVE, BNB etc.  The revaluation and gearing scenario is too confusing to me and makes me nervous of whether share prices or dividends will be maintained in this sector.


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## Dr Zaius (26 September 2008)

i'd like to thank everyone who posted here on the PTN thread.  i should
have known to check if profits/dividends were coming from revaluations
rather than net income.  the financial report for year ended june30 
2008 had $47m in distributions in the past year, profit of $57m and 
'increment in fair value of investment properties' of $55m, so if there
were not this revaluation then profit would be around $2m for the year.

i'm the kind of guy who wants to buy into a firm and leave it there
for many many years, this eating of the future is not for me.

the saving grace for buying PTN now would be the heavily 
diminished share price leading to a very nice discount to NTA, where
some 'future eating' could be sustained, for a while, so long as that
NTA does not go down (if the value of their property drops) too much.


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## RustyK (29 September 2008)

I hate to say it but this stock is starting to look like a real dog!!!

Dividends slashed from 2.1c per quarter to 1c.  Biggest problem is the fact that they don't even generate enough cashflow to pay the 1c per quarter which means they will need to keep eating into their cash reserves.  I was once a believer in this stock but recent events make you question Management and the business model.

Management advised 9 July 2008 that 2009 earnings are expected to be in line with 2008 and dividends/distributions would also be in line with 2008 and how they have had such a great year with a great future ahead.  Then on 28 August (7 weeks later) they say because of the economic environment it would be prudent to lower the distrbution.  Bingo 22nd Sept they slash the dividend by 52%.  

My diagnosis crap management!!!  I find it hard to believe that business altered so materially in the last 7 weeks that distributions need to be slashed by 50+%.  NTA backing has declined by 11 cents ($1.05 to 94c) in the last year.  Well 8.5c of that is reduction in cash reserves caused by distributions paid to investors that they could not afford to pay but did so to induce idiots like me into market for their securities.  You can chalk the rest up to interest expense over an above their cash earnings for the period!!!  They pat themselves on the back for paying a distribution for the year in line with their advice upon listing, big deal guys you paid back the money raised in the prospectus.  You should have just asked us all for 91.5 cents per unit and told us there was not going to be a distribution this year at least we could have put our 8.5c to good use!!!

I am still holding but will exit upon some degree of a price recovery.

40 cents hurts.


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## concerned (18 October 2008)

Hello to all PTN unit holders.  This is my first post ever so forgive me f I do not get it all right.

I am writing because I have grave concerns about the way the Prime Trust is being run by the current Responsible Entity (RE), as there is no direct correlation between the distributions and unit price of the fund.  The RE is acting in away that will maximise it's income by way of gross NTA and gross operating incomes, with no concern about the affect that these actions are having in decreasing the NTA and distribution per unit.

To illustrate this, take the current script offer for the 40% BBC.  I am sure that this will have a positive effect on the income being paid to the RE as the gross amount NTA of the group will go up as will the gross amount of income, of which the RE will be paid 0.25% and 4 % respectively, however is this really in the best interests of the unit holder?  BBC pays 7.6 cents per unit, if 40% of the BBC unit holders respond this will have a large dilution affect on the distribution pool from which Prime Unit holders are paid, plus the NTA of BBC is substantially less that that of Prime,  lowering the NTA per unit after the 40% offer to approximately 79 cents (from the offer document).  

How is this in the best interest of the current unit holder? 

How will this increase the value of the units that I hold and  the income generated by them?  

I believe it will infact have a negative impact on the unit price and distributions! It can be construed that the RE is not acting in the best interests of current unit holders. If I am wrong please inform me of how this transaction will be positive in terms of distribution, unit price and NTA per unit.

If you agree with me please write by way of complaint to the RE and if not satisfied continue with the Financial Ombudesman.  With the string of annoucements re-distribution  also question their competence to conduct the affairs of the Unit Trust.

I ahve written to The Hon Dr Michael Wooldridge, over a month ago expressing these concerns but have heard nothing.  I ahve also raised these concerns by phone to Mr Philip Powell  and told was told that I can just sel my shares, locking in a huge loss that te REs actions have contributed too. We the unit holders need to get togther and call this RE to account.

Regards

Concerned


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## Gunlom (18 October 2008)

I agree...

anyone looked into what it would take to remove them as the RE ?? 

might be worth looking into...

or at least giving them a scare into acting abit more in the unit holders interest


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## concerned (18 October 2008)

Hi All


I believe that removing them would be expensive and another would need to found.  I firmly believe that we unit holders should exercise our rights and start by writing formal letters of complaint to the RE.  The RE has a financial services license and will have 45 days to respond.  At the moment they believe that the unit holders are individuals that are not networked and therefore no concerted action can be taken against them.  Please write to them on two grounds:

1. Incompetence

          a.  The way the communications on distributions have been handled and the about face in what they would deliver by way of distributions. This has been misleading and anyone who bought (or indeed held as I did) were mislead by the earning outlook and the frequency of distributions that was published on 9/7/2008, and this is before the current financial meltdown.  

The first notification of a reduction occurred in the Preliminary Final Report on the 28/8/2008 6 days later the script offer for BBC was announced.  How much could projects have changed in that 6 weeks and even if they have what does it say about how well the RE understands the business.

           b.  The document that was submitted to ASX for the 40% offer had so many errors (35 in all) that it need to be resubmitted, and number of these could have been addressed by proof reading (eg insert date here).

Note also that at no time did the RE when embarking on this course of action to dilute our holdings ever having used the data room of BBC, how then do they have a good idea of what they are attempting to acquire.


2. Destruction of Unit holder value.

	The actions of the RE are not consistent with building unit value and that that the REs actions are destroying unit value in terms of NTA and Distributions by the script offer for BBC. As I have described early.  The “target statement” there is an interesting analysis of the amount of fees that would be paid to the current RE is it managed all of BBC look at page 14.

Please note that the source of all information that I quote is public domain, and I ahve gotten this information from Commsec.

Please write to the RE and complain, if there response is not satisfactory refer the matter to the financial Ombudsman.  

By the way did you realise that the RE was paid approximately $7.5 million in custodian and responsible entity fees (not to mention a $32.9 million fee for listing the trust) and the total distribution to us was approximately $47,396,000.  Ever wonder where your money is going.


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## concerned (22 October 2008)

Dear All

Here is the letter of complaint that I am wring to the RE.  If you think 20 cents by way of unit prices is bad, (now at an 8% discount to the company the RE are trying to trying to obtain a 40% stake in) please read below and voice your dissatisfaction. 

*********************************************************

Australian Property Custodian Limited
Level 2, 613 St Kilda Road
Melbourne 3004
Victoria
Formal Complaint

I am writing because I have grave concerns about the way the Prime Trust is being run by the current Responsible Entity (RE).

My concerns are in two areas, destruction of unit holder value and managerial competence.

1. Destruction of Unit Holder Value
As there is no direct correlation between the distributions and unit price of the fund. The RE is acting in away that will maximise its income by way of gross NTA and gross operating incomes, with no concern about the affect that these actions are having in decreasing the NTA and distribution per unit.

To illustrate this, take the current script offer for the 40% BBC. I am sure that this will have a positive effect on the income being paid to the RE as the gross amount NTA of the group will go up as will the gross amount of income, of which the RE will be paid 0.25% and 4 % respectively; however is this really in the best interests of the unit holder? BBC pays 7.6 cents per unit, if 40% of the BBC unit holders respond this will have a large dilution affect on the distribution pool from which Prime Unit holders are paid, plus the NTA of BBC is substantially less that that of Prime.  This script offer will have the affect of lowering the NTA per unit after the 40% offer to approximately 79 cents (from the offer document). 

1.1   How is this in the best interest of the current unit holder, in quantifiable terms? 
1.2   What modelling was done? 
1.3   How will this increase the value of the units that I hold and the income generated by them?

I believe it will in fact have a negative impact on the unit price and distributions! It can be construed that the RE is not acting in the best interests of current unit holders, which is a violation of the constitution. If I am wrong please inform me of how this transaction will be positive in terms of distribution, unit price and NTA per unit.

As of this date in a little over a year the RE have overseen the loss of approximately 80% of unit holder value in terms of unit price, to the extent that the units now trade a 8% discount to BBC.  How can the RE justify taking the higher than industry norm management fees in the face of such appalling performance.  Even BBC with the much publicised problems of its parent is performing better.

2. Competance

My complaint against the RE by way of competence falls in three areas firstly communication of distribution information and secondly the manner in which the 40% script offer for BBC was launched and finally discrepancies in documentation.

Communication of distribution information 

These communications have been misleading and anyone who bought (or indeed held this stock as I did) was misleading by the earning outlook that was published on 9/7/2008, and this is before the current financial meltdown. So I have been financial impacted by the incompetent and badly delivered earnings guidance. 

The first notification of a reduction occurred in the Preliminary Final Report on the 28/8/2008 6 days later the script offer for BBC was announced is it linked? The excuse given was that there was a delay in projects being completed. How much could projects have changed in approximately 7 weeks and even if they have what does it say about how well the RE understands the business.

40% script offer for BBC 

The document that was submitted to ASX for the 40% offer had so many errors (35 in all) that it need to be resubmitted, and number of these could have been addressed by proof reading (e.g. insert date here).

At no time did the RE when embarking on this course of action to dilute our holdings ever use the data room of BBC.  How then does the RE have a good idea of what they are attempting to acquire?. In the Bidders statement you state this as a risk, which could have been mitigated by due diligence, in effect you are buying something in the Units holders name of which the RE does not have an in-depth understanding.

Misrepresentations

In the full year Statutory Accounts on page 7 you state that the return per unit for FY 2007 was 6.84 cents but in the Bidders Statement on page on page 111 you state that the return to unit holders was 9.4 cents per unit for FY 20007.  I will be taking this issue to the ASX, and ASIC if adequate explanation is not given for these anomalies.

Additionally in the earning guidance of 9th of July 2008 you stated that quarterly distributions would continue with no end date stated in fact you mentioned giving rolling guidance and in an example stated “In  October  2008,  Directors  will  again  provide  guidance,  this  time  for  the  December  and  March  quarters” yet in the Bidders statement  of 4th of September 2008 you state that “Distributions are presently being paid on a quarterly basis and this frequency is expected to remain for the 2008 calendar year”.  

Questions

2.1 Why has there been no communication of a change to quarterly distribution frequency or that change in the continuation of quarterly distributions was now at the discretion of the directors?
2.2  In the last financial year the RE was paid approximately $7.5 million in custodian and responsible entity fees and the total distribution to unit holders was was approximately $47,396,000. What have you done to earn it?
2.3 When do you envisage that Stapling will take place and how much is this going to cost unit holders?
2.4  The IPO raised some $100 million in new capital for the trust, by creating new shares, which had the affect of diluting my holdings by way of NTA and Distribution. What does the RE intend to do use this money to create organic growth?
2.5  Does the RE have plans to grow this unit holder NTA and distributions, rather than just the fees that it collects?
I understand that the RE has a financial services license and is a member of FICS; as such the RE has 45 days to respond to this complaint. Please acknowledge this complaint in writing to the above address so that the 45 days can commence.

One last point, the fact that the RE continues to congratulate itself at delivery double digit returns on against a greatly depreciated unit price does not endear it to unit holders who paid $1.00 for there units.


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## numbercruncher (8 December 2008)

RustyK said:


> I hate to say it but this stock is starting to look like a real dog!!!
> 
> Dividends slashed from 2.1c per quarter to 1c.  Biggest problem is the fact that they don't even generate enough cashflow to pay the 1c per quarter which means they will need to keep eating into their cash reserves.  I was once a believer in this stock but recent events make you question Management and the business model.
> 
> ...






Down to like 14 cents -  with nose diving interest rates ... well I jumped in already .....

Anyone have input ?


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## prawn_86 (8 December 2008)

numbercruncher said:


> Down to like 14 cents -  with nose diving interest rates ... well I jumped in already .....
> 
> Anyone have input ?




I did look at these guys a while back but didnt buy as they dont seem to be able to become profitable on what they have, hence the need to pay distributions from borrowings.

Definite potential, but still a bit 'wait and see' for my liking


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## basilio (9 December 2008)

Its a bit mean but after reading the concerns of shareholders it looks as if the Prime Retirement trust was all about providing a prime retirement for the management. 

Really hope you can get some justice.


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## countryboy (14 December 2008)

I also ran the ruler over numbers some months ago and came to the conclusion that dividends were drawn from borrowings.Put my money elsewhere. Lots of stock i would love to invest in now including PTN if money was more fluid but alas banks have lost all ability to calculate risk and are slowly screwing some great companies to the wall. There are lot of property trusts out there looking at fire sales within a few months if credit doesnt free up soon. reporting seasons in 2009 will confirm or blow off that conclusion.


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