Ann: DA and cornerstone tenant secured at Oakdale East Stage 2, page-6

I just had a good read through the presentation yesterday and thought I would give some general comments followed by the attempt I made to factor in the real inferred asset value adjusting for the expected correction in property valuations

1. Management seems significantly more bullish on building products than in the last presentation they gave. The financial year is tracking ahead of expectations so far although they did say they expect sales to slow considerably through to end of June next year. Something that really jumped out at me was just how much cost they've taken out in both Australia and the US with a significant number of brick plants closed and employee head count being reduced by between 20 and 30 percent.

2. The commentary on building products in the medium term is also more bullish with lots of talk around the potential for a building boom driven by government initiatives to ease the housing crisis in coming years

3. This wasn't flagged at the last results but management now expect a 10 percent correction in the industrial property portfolio which will take the cap rate up to 5.2%. I think we could make the argument that this may still be a little tight but they are still seeming very confident in big rental increases which will help underpin the valuations in the years ahead. This correction also needs to be considered in the context that the portfolio cap rate has halved over the past 10 years up until now so I think we were well and truly due for an adjustment

Now to come up with a bit of an adjusted inferred net asset value because that's what always attracts me to BKW as in investment

I rounded up the shares on issue to 153 million

26.1% SOL share holding has reduced slightly since the last presentation and sits at $3.08 billion as of today. I love SOL but would make the argument they are a little overvalued at the current SP so there's probably a bit of potential for a pull back here and it's also important to note the cost base on this investment is so low that there would be a huge amount of CGT involved in a sell down of this stake ($20.13 per share)

The two property trusts: Current value is 2.27 billion before factoring in the first decline in value. To be conservative I am going to factor in a further 5 percent decline which would take us to a total correction of 15 percent from the peak. This would bring the portfolio down to 1.93 billion ($12.61 per share)

There are also 3 further parcels of land that are on the books as cost but have been flagged for development. We will just leave those "as is" for simplicity and to be conservative but there is potential there for a higher valuation just like there is potential that my property trust valuation might be overly conservative. There might also be a decline in the SOL SP if I'm correct in it being a little overvalued so the value is never going to be exactly right

Development land as is: $384 million ($2.51)

Building products: 579 million ($3.78)

Less Debt of 652 million (-$4.26)

This would give us an adjusted inferred asset backing of $34.77 which I'm pretty happy to base my estimate on.

This gives us an effective discount of 29 percent based on a share price of $25.

Something that I believe the market might be missing is the potentially for BKW to follow SOL in stepping the dividends up quicker than in the past over the next few years as the income generated via SOL and property rental continues to grow.

I'd be interested to hear some thoughts from other holders. It seems like a few brokers released minor downgrades yesterday so I'm hoping that we might drop down around $23-$24 so I can top up again.