BKW/SOL have such messy surface level financials due to all the...

BKW/SOL have such messy surface level financials due to all the investments that I've always found I need to dig deeper and listen in on the results presentations to properly understand the current financial position. I just tuned into the stream and these were my observations:

- The big headline loss is due to the cap rates on the property portfolio expanding from 4.1% out to 5.1% which we already knew about. I came away still feeling reasonably bullish on our long term property prospects considering the portfolio currently has a passing rent that is 35% lower than the average market rent (it's important to note that Lyndsey mentioned the significant rental increases will need to be captured in stages over the next few years considering around 30% of the leases have caps on how much they can be increased). Lyndsey also reiterated that he's hopeful that further cap rate expansion won't be required and the property values should remain steady.

- The inferred asset backing figure is now at $36.68 so a 24% discount to the current SP

- Their was a good question the sale of the M7 Hub which myself and quite a few other shareholders don't fully understand the rational for considering it seemed to be a prime asset with good future investment return prospects. Lyndsey reiterated that the gearing needed to be brought down (currently sitting at 18% post asset sale) and that M7 Hub was sold due to having no further development potential and the warehouse sizes being smaller (he talked quite a bit about the real shortage being in large warehouses and the smaller end stuff being more competitive).

- Margins actually increased in building products for both Australia and North America although North America is coming off a much lower base. Once again there was a lot of talk about major capital investment programs being completed and the priority in the short to medium term being cash generation from this part of the business. I was pretty amazed at the significant figures they gave on reduction in headcount (which is always sad to hear) and reduction in operating plants which have gone from 33 to 20 in Australia over the last few years. They believe that Australia is on the cusp of a building boom and another amazing statistic quoted was that immigration into Australia is now at it's highest level since world war 2.

- There was also talk on the Craigieburn site which it now seems will be targeted for industrial development rather than residential due to government red tape. Lyndsey reiterated this one is still a couple of years off but is a great parcel of land.

Overall I came away pretty positive as I always do with BKW. The SP decline is interesting and if it goes any lower I think I will top up again.