karasco replies

I wish you guys would not make this personal

Although I am losing money I still have some pride left.

I have been honest with my friends and family.

The problem has been this stupid margin loan I got into, BT margin lending made me panic when they advised a cut of LVR from 75 to 50% for GPT & GMG and from 75 to 0% for IIF. BT have delayed and will not cut the LVR until 18 March despite receiving emails etc that they would do it in early Feb 2009. I feel like taking legal action.

I was diversified and sold my other holdings, banks, Telstra, retail and resources (all blue chip)

I have changed margin lenders - BT stuffed up and took till this week to finalise. The new lender has 75% on all three REITS I hold

My friends and family are lending me money to repay the margin loan (if need be to NIL) Based on my loan now I can sustain a further 50% drop.

The goal is to stay in long term 3 months, 6 months, 12 months or 24 months whatever it takes.

Hopefully distributions will help meet interest payments otherwise I will meet the interest commitments from other business cash flow I have.

AS I have 2.8M GMG, 1.6M GPT and 2.75M IIF, my cost for each is GMG = 71.50 cents, GPT 74.60 cents and 16.5 cents for IIF

Assuming IIF goes to nil. I need over the LONG TERM for GMG & GPT to recover to 70.0 cents each for a manageable loss and if they reach 94.0 cents for break even (ignoring any distributions) GOT I receive $33,600 on 26/03/09 as an example.

IF GMG pays say 5 cents in July/Aug another $140K

My margin loan stands at $1.0M (against value of portfolio in Jan 09 of $4.5M) after GMG. IIF & GPT dropped between 50-80% since then my safety buffer reduced from 55% to Nil.

If I sell up now no chance of recovery if I stay in I have already factored IIF to go to NIL.

I do not believe that GMG & GPT will go to nil, do you guys??

If they do then I have stuffed up.

If they start recovering and each recover to say 40 cents I can stay in comfortably.

I have explained this to my friends and relatives, I did not ask them they asked me what assistance they can give (I have helped them in the past and on some occasions wrote off large sums).

They discussed amongst themselves, rang brokers etc and asked about GMG, IIF and GPT and were told the bad news about REITS but were also told that failing Armageddon, they should recover to 70 cents plus in the long term. IIF as I repeat was factored at NIL.

The goal is to reduce the margin loan to NIL over time with funds or sell downs so I can have the luxury of time to recover.

I would not I repeat take funds from anyone to fund gambling; they insist and know who I am and what I stand for.

They are prepared worst case to loose the money or wait long term for me to repay them from asset sales etc.

MY main investments are sizeable commercial property properties geared to around 45-50%. Now is not the time to sell.

IN summary if I have no margin loan or minimal loan, I can hold. If I sell now I loose over $2.7M.

What would you do?

Even a 25 cents increase in GMG & GPT would give me 4.4M 8 25 cents = $2.2M

Do you guys believe that they will never again hit 45 cents for GMG and 55 cents GPT??

Their NTA after devaluations is far greater than this.

I did my research, but fundamentals are out the window until the US and financial markets recover.

The REITS have strong cash flow, they do not have functioning credit markets that is the problem

Your views are welcome. I have been honest, ridicule is not expected.

Thanks