Avi Mentioned:1. they are aware of higher interest rate2. Large...

Avi Mentioned:

1. they are aware of higher interest rate
2. Large proportional of portfolio is hedged to interest rate rise, 50% of the portfolio is hedged, the other 50% is floating. The length of the hedging period is 3.5 years

Given around 50% of portfolio is linked to CPI rent reviews and 50% fixed increases and what he said above, the increase in income will offset the interest rate increases.

What is worrying is the rising cap rate which will cause NTA to drop, hence LVR will increase considerably, this will breach certain loan covenants and if banks tighten their loan conditions, we can see deep value capital raises which will be a repeat of 2008...

However, we must bear in mind the following:

1. RBA has stated clearly they are assessing rate decisions based on data coming in, if it does get to a position that liquidity is non-existent in the market, I'm sure RBA will increase liquidity to the market. Inflation is a massive problem, so is a broken financial system and widespread recession.

2. CLW has some of the best portfolios in the industry, banks will look upon them favourably as compared to other assets such as retails malls or offices. which will make their refinancing easier than other REITS.

3. CLW sold the VACANT virgin building, yes, at a discount to book value. but the current share price is also 30% below NTA. If they can sell a vacant office building to someone else, what are the chances of them selling an industrial property with 10 year WALE to some other investor ? They can use this to pay off debt and hence avoid the highly diluted capital raises. I mean their debt are not due tomorrow or next month in which they need to get finance straight away, they have time to plan ahead and sell assets if necessary.

4. What they have demonstrated from Day 1 are truthful to their words, increasing income, long wale, sensible gearing. If CLW goes and buys assets at huge premium in UK or something, which is not truthful to what they promised then I will dump them at any price. However, I can't really see anything silly.

5. Today's fall is most likely related to Morgan Stanley's downgrade on CLW and other REITS, in which they stated " Rates are expected to stay elevated for the medium to longer term".... how accurate is this expectation ? I have learned not to ever make predictions, to say rates will stay elevated is a guess game IMO, YES, we are seeing high inflation at the moment which is primary caused by energy crisis/supply and demand issues and not rate issue. To say rate will stay elevated for the medium to long term is not a sensible comment. It may turn out this way, but nothing is certain.

They also said "elevated", what is elevated ? Is the rate now elevated or another 5% increase elevated ? If the rate right now is elevated, then it is very low now and this elevated level is not a concern.

6. interest rate is already at historic low level and cannot go any lower, what does the market expect ?? the only way it can go is up.... I mean, do they really expect a negative rate ? I thought a rise in rate inevitable.... then why such a panic ?

The market is becoming irrational imo and is pricing for a possible repeat of GFC, we know for certain that governments will not allow that to happen. they will be more rate rises, but as soon as the economy shows signs of slowing down, rate will stablise.....