Following the revelation (to me) that Investore has no employees, I thought it might be useful to restate expenses in a way that compares with other companies that do employ people. Effectively I am looking at what would happen if the 'contract work' was brought in house. Furthermore I am looking to compare those returns with similar property companies.
Property Expenses FY2021 |
Investore As Presented |
Investore with In House Staff |
Argosy As Presented |
Property For Industry As Presented |
Goodman Property Trust As Presented |
Management expenses |
$0m |
$1.102m |
$0m |
$4.612m |
$0m |
Management Services Contracted |
$1.102m |
$0m |
$0m |
$0m |
$0m |
|
Other administration expenses |
$0.831m |
$0.831m |
$11.888m |
$2.652m |
$2.700m |
Direct property operating expenses |
$8.701m |
$8.701m |
$25.762m |
$16.753m |
$29.0m |
Accounting expenses |
$0.250m |
$0.250m |
$0.194m |
$0.201m |
$0.300m |
Performance fee expense |
$2.076m |
$0m |
$0m |
$0m |
$13.7m |
Asset Management fee expense |
$4.965m |
$7.041m |
$0m |
$0m |
$12.8m |
Expense Recoveries |
$0m |
$0m |
$0m |
($0.712m) |
$0m |
Total Operating Expenses {A} |
$17.925m |
$17.925m |
$37.844m |
$23.506m |
$58.5m |
|
|
|
Gross Income from rentals |
$64.514m |
$64.514m |
$111.522m |
$107.941m |
$182.0m |
Total Operating Expense to Rental Income ratio {A}/{B} |
27.4% |
27.4% |
33.9% |
21.8% |
32.1% |
Building Portfolio Valuation (avg) {C} |
$966.5m |
$966.5m |
$1,938m |
$1,841.9m |
$3,431.7m |
Total Operating Expense to Operating Asset Ratio {A}/{C} |
1.85% |
1.85% |
1.95% |
1.28% |
1.70% |
Notes
i/ 'Building portfolio average value' for ARG is from Argosy thread post 368. 'Building portfolio average value' for 'Property for Industry' on post 5 of the PFI thread. 'Building Portfolio average value' for Investore is from post 243 on the Stride thread.2021
What constitutes a 'similar' property company is open for debate.
I have selected Argosy for four reasons:
1a/ At the end of Calendar Year date, and considering the big 8 property companies, Argosy was the closest in yield to 'Investore'. That is equivalent to saying it has an equivalent 'market risk' from an investor perspective.
1b/ Argosy does own some big box retail stores - like Investore - albeit making up only 12.5% of the total portfolio (Refer Argosy thread post 368).
1c/ Argosy no longer has external managers, having bought them out in 2011 (in contrast to Investore).
1d/ Argosy has a very high occupation rate of their properties of 99% (c.f. Investore 0.9% vacancy rate)
Furthermore I have selected 'Property for Industry' as a second comparator because:
2a/ They have long term stable tenants.
2b/ They have a very high occupation rate, 100% as of EOFY2021.
2c/ Property for Industry does not have external property managers (the external management contract was bought out in 2017).
2d/ The construction of the buildings in the portfolio is generally 'big box type', even though they are not used for retail purposes.
2e/ Building property valuation is on post 5 of the PFI thread.
Finally I have selected the 'Goodman Property Trust', as a third comparator because:
3a/ they operate 'big box buildings' (albeit not in retail) AND
3b/ they do have an external property manager (the same situation Investore is in).
3c/ Building property valuation for GMT averaged over the year is (from GMT AR2021):
0.5 ($3,074.0m + $3,789.3m) = $3,431.7m
3d/ they have a high portfolio occupancy rate of 98%