From another board:"By far the largest component of value in...

From another board:

"By far the largest component of value in VPG, is the Australian investment property portfolio, representing $483m, or $4.20 per share in assets. This portfolio has performed very satisfactorily with 96.6% occupancy, rental growth of 2.8% and zero delinquencies. The portfolio is currently valued using an 8.7% cap rate. It?s this portfolio that has been paying the salaries and keeping the lights on at head office over the last few years and it continues to do so.

The Long and the Short of It

The raw numbers go something like this (all figures quoted are on a per share basis): $1.81 in development assets, $1.05 of non-recourse development debt, $0.5 of net European assets, $1.53 of Australian assets, net of all corporate level debt, including the convertible note.

With those numbers in mind, if we give the development assets a further 20% haircut, we are left with 40c per share after all development debt has been repaid. Under the current MBO proposal, 35c per share will find its way to VPG for the sale of Valad Europe. Add these two numbers to the net Australian assets of $1.53, as described above, and we are left with $2.28 in value ? a 90% premium to today?s trading price of $1.20.

Of course, there is risk to this value being realised. Principally due to the fact that the company still has over $500m in debt, which needs to be reduced. Also, there is a risk that the company will not realise any value for the European business if the current proposal falls over and others fail to materialise. Having said all that, our view is that even under a liquidation scenario (which we think is an unlikely outcome), investors will not lose a large portion of their investment from here and if the company is able to get its house in order over the next few years, there is significant upside potential.

Link Provided: takingstock.com.au/2011/03/reconsidering-valad/"