It was interesting to read a couple of articles with quite...

It was interesting to read a couple of articles with quite varying perspectives in the AFR around office values this week. Earlier in the week the big super funds were saying that they expected to have already reached the end of their valuation write downs on office property considering the 15 percent ish hit that most of them already took last year. Then today they had an analyst saying that there's probably another 1 or 2 write downs to come and the trough for prime office property will probably settle around a 6% cap rate.

This would put our NTA in some serious trouble and is unfortunately the outcome that I think is most likely particularly considering the case of TOT which bought at the absolute peak of the market and initially had the assets on the books between a 4.5 and 4.75% cap rate.

Based on my previous calculations we'd still have breathing space in the covenant and the reduced NTA would end up around 85 cents

Just some commentary on that upcoming Canberra vacancy when I spoke with James Storey (the CEO) around 6 months ago he seemed extremely confident in getting that remaining space leased however the fact that we've heard nothing since doesn't' fill with with confidence as I reckon they'd (understandably) be desperate for some good news to announce in a rough time and would have already notified the market if anything had changed.

I'd personally like to see them take one more big valuation hit at the next result to provide a little more certainty rather than prolonging the agony further than required.

I would also like to see them slash the dividend back to the net income the properties are generating (while still utilising the franking credits) and finally get the minority stake in Home HQ Artamon sold however I get the sense that there just isn't any appetite for that asset unfortunately.