the king of dogs, page-14

Not that it makes any difference but I’m out.

We must remember VPG owes McCabe ~$70m and he is willing to do what is best for us, not Kev. Any offer would need to be agreed on by the board and shareholders and to propose corruption is a bit out there, even for HC. We would all like an announcement to give some price direction but until it comes, harden up. SP will not hop without this and deals take time. We can’t expect Kev to pay 20c for something available at 4, why would he? Somewhere in between will be negotiated and proposed soon. If you look at this deal as us v Kev, time is on our side. With time the property market further stabilises and capital begins to flow. Every day without a covenant breach is a day closer to dealing at NTA and eating dividends.

For what it is worth I don’t believe there will be any placement other than this D4E. Valad now has positive cash flow and any developments are way off the radar so why the need for cash? Our required 2% reduction in gearing should be easily achieved given a few asset sales at fair price. Recent flat performance is just a function of the circumstance of a market waiting for a first hand valuation being negotiated by McCabe.

The major risk for me is further increases to cap rates for property valuations coming in June. My view is these have peaked and will be on the way back down by June but I will be watching these closely in coming months as a reliable indicator on REITS, especially any close to LVR covenants.

Cheers all and best of luck with whatever strategy you might have, Benny.