timbercorp primary infrastructure fund, page-12

i like the business model idea of AAC, however, I think its current price is stretching its valuations...

also, I am not convinced of their hedging policy on wheat prices, and I expect that the costs of feeding their cattle will largely outweigh the benefits gained from increasing beef prices.... it is on the watchlist though, and I will wait for a market correction before getting back in.

As for TPF - there are a couple of fundamental points about it.

1. TPF is only a passive investment - a set and forget. Yes, you are not going to make huge capital growth profits (like you could going directly into TIM and/or GTP), however, you are assured of a stable share price, stable land value and stable rental yield.

2. Rental yields from TPF are being paid directly by TIM, and are guaranteed by TIM for the next 22 years.... regardless of what happens to rainfall, ATO rulings etc... MIS investors who have already tipped money into these almond projects are committed to paying their instalment amounts. So whilst there is some indirect exposure to the performance of those almond projects, at the end of the day, TIM is the lessee and will need to meet its payments. I am confident of this happening. So if you know of any other agri property trusts paying a 9.5% yield with tax deferred components, and such a secure rental gurantee, then please let me know. TIM, GTP and AAC don't come close.

3. IF the government decides to remove water allocations, there is absolutely no way in the world that they are going to simply strip these allocation entitlements off farmers for zero price. Governments will have to pay fair value for these, and most likely at current prices. TPF water allocations have been bought at cheap prices (around low $1,000 mark), and at current market values would fetch between $1,500 to $2,000. Any government compensation would have to fall within that range - otherwise the political backlash would be huge.

So overall, whilst I think there have been some very valid points, the overall merits of TPF are being overlooked on this thread.

1. stable assets and stable return at a discount to NTA.

2. secured yield play, that is high with tax deferral components.

3. solid capital growth (with potential for a large uplift from the water values which have not been factored in the NTA valuations).

A great investment for the 50 and 60 year olds who want a nice stable return for retirement.