CLW dropping, page-6

The cap rate looks 'fair' but only if interest rates don't 'stay higher for longer', especially the 10yr government bonds which are used to assess the risk free rate of return.

Another headache, traditionally property has had a valuation 'risk free premium' of 3-4% on top of the 10yr government bond yield

To prove this, down load REIT annual reports from the period 2012-2014 and see the commentary.

Only in recent years has the risk free premium declined, coupled with an artificially low 10yr government bond yield (because of zero interest rates), the result was unsustainably low cap rates of 4-5% at their peak.

Now given 10yr bond yields are now spiking again, and that risk free premium is yet to be fully reflected, I am predicting a blood bath in valuations.
This can either occur fast or slow (slow motion train wreck).
But right now get ready for very bad Dec half year results (more writedowns) and again in the June full year results for FY24. If slow motion train wreck, then expect the same to occur into FY25 with more write downs!!!.

Against this we also have to put up with market psychology. Will market pricing despondency set in??

Think about it, if we are going to see consistent losses in the financials over the next couple of years as property values are constantly reduced (through an ever normalisation of the true cap rate), dividends being constantly cut (as interest rate expense rises faster than rental increase), how will the share price react (which reflects not just valuation, but also market psychology: ie the mass effect of peoples thoughts on buying and selling the shares)