re: Ann: INVESTMENT IN BURWOOD SQUARE AND NEW... This announcement does not contain the type of detail necessary for PBD shareholders (or potential shareholders) to make an assessment as to the extent of PBD's exposure or potential gain. As with the Annandale apartments,the joint venture partner already owns the land and has spent considerable funds getting the project up to approval status. Has PBD bought into the existing loans of the joint venture partner(shared the risk), as well as an unknown portion of the future development and marketing costs? The announcement indicated that anticipated sales are expected to be around $200M. However the announcement does not detail the anticipated costs,or the extent(percentage) of PBD's investment in the project.(Same issue with Annandale). Similarly we don't know the extent of the new bank facility and whether it is fully self secured through pre-sale contracts or low LVR. If it is not fully self-secured, what is PBD's loan to value ratio in the project? Does the new bank facility require security over any of PBD's existing assets (Pt.Grey, Esperance, Oceanique)? When do loan repayments start and is there sufficient leeway if project delays eventuate? I do have concerns if security hinges predominantly on off-the plan pre-sale contracts,particularly when there is a 3 year lead up period before titles are available and contracts need to be honoured. If real estate bubbles develop,or markets collapse,banks can re-assess the value of the assets and refuse to lend the apartment buyers the funds they require to payout the contract. This is exactly what happened with Oceanique,and I hope that PBD are exercising sufficient diligence to ensure they don't make the same mistake twice.
PBD Price at posting:
1.6¢ Sentiment: None Disclosure: Not Held
