URB

Can you tell me if you have reported on URB (city renewal).

Can you explain why the share price has dropped 10% since listing? I thought that being backed by Soul Pattinson it would be a reliable investment but I have been disappointed by the large fall off, especially the 5% drop after reporting in July. I don’t know whether to cut my losses yet again and get out.

 

A: URB is a new company and it is going to take some time for it to bed down. In particular, the investments in the direct property assets could take some years before the returns are generated.

 

In terms of URB’s NAV (net asset value)y, its pro-forma NAV on listing was $1.065, and at 31 July, this was down to $1.02. URB has noted two changes:

  1. a) a decision to expense (rather than capitalize) some property acquisition costs; and
  2. b) assessing the future tax benefit at 27.5% tax rate (rather than 30%).

 

I think you need to give a manager in this type of asset sufficient time to establish their portfolio credentials –  and not worry about where the stock is trading, which often has very little relationship to the price of the underlying assets.

 

regards


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