careful, page-28

I guess it is the unbridled enthusiasm that amuses me, and I mean no offence to people with optimism, I am bearish, but I think justifiably.
Valad is a business that once had an enviable position in the Australian value add / property investment and development arena. It could easily raise capital from a loyal following of Australian institiutional investors.
It was a specialist manager of office repositioning, bulky retail development, of industrial projects etc.
It then decided it needed to go GLOBAL!
Management picked the very top of the market cycle to do so and bought Scarborough. Scarborough had done the rounds and was spruiked to most of the AREIT'S before it found Valad as the perfect, willing buyer.
The Brits were chuckling under their largers back in the UK at he price being paid. McCabe was quoted at the time...."this market is all froth and bubble, we dont mind as long as we are the one drinking all the froth"..

Valad now finds itself in the following mess;
1. Market cap late 2007 $3 billion.
2. Market cap today circa $60 m( sadly I am a long term Valad investor) It has lost $2.94 billion of shareholder value, how can there be confidence in management?
3.It is suspended from research houses such as UBS, ph around other investment banks and see who still covers the stock!
4. It has had investor capital in some of its domestic funds cancelled ( my no confidence statement)
5. It earns base management fees on GAV( values dropping, so fees are dropping). It relies on performance fees from project outperformance ( currently nil). Does the base fee revenue cover operational expense? Hence my comment about sustainable cashflow. I do not correlate the share price to cashflow like suggested by other HC comments, the falling cashflow issue is real, the share price is reflective of this and the risk the business has. I do not think the share price will sink the business, the business model it runs will.
6. It earns fees each time it establishes new funds and each time it spends the capital on new investments ( this wont be happening anytime soon)
7. Even after the writedowns on equity invested in VCS and writedowns on Goodwill ( all going to be massive this half)are forgotten, where does this leave the business for the future. What is the strategy? The team has been decimated, the people left remaining are the highly paid fund managers who only manage and raise capital ( wont be much of this happening either)
All of the above is based upon my own research, my 20 plus years in Property Investment Banking ( now retired), and from discussion and research with my ex Investment Banking and Property colleagues. The thread was initially titled "be carefull", I think this is prudent.