Ann: Independent Valuations and Leasing Update, page-8

The RBA yesterday and said "Inflation in Australia has passed its peak and the monthly CPI indicator for May showed a further decline. But inflation is still too high and will remain so for some time yet." So at least rate hikes might be finished but there is no indication that rates will come down as yet.

Management saddled the business structure with too much debt at precisely the time when the writing was on the wall for interest rates. With an interest bill that looks like being around $4 million earnings before the interest roughly covers interest by only two times.

In the middle of 2022 it was clear to all that we were in an environment of rising interest rates. On 15/7/22 my own notes tell me "back in early Feb 2022 the yield on a 2 year government bond was 0.9%. Now its 2.9". The deal had given them the option to back out on the purchase of the properties. Yet on the 28th of July 2022 the settlement of the Canberra property was announced, followed by the announcement of the settlement of the Melbourne property on 15/8/22, and the Brisbane property on 19/9/22.


The TOT announcement 30/6/22 states "360REIT invested approximately $123m into IAPand has received approximately $165m pre-tax as consideration for its 12.8% holding. The announcement also states "The transaction had an operating gain of $41.7 million" We can see from the 31/12/22 balance sheet that the transaction generated an approximate $12 million tax liability. So the entity would have been sitting on cash after tax of $153 million approximately. Why on earth they gave up all that cash for those three properties at that time is something that still leaves me speechless.

They've done an number on investors. The share price tells us that.