just a few of the positives and the negatives on this one
If there is asset downgrade the debt ratio will rise.
What are the chances of that happening?
Well, they don't seem to value all their properties at once, I've been told.
But I could be wrong.
In any case they are valued on the basis of discounted cash flow. 80% of the company's assets are in Australia and 20% are overseas in mostly Europe and a small proportion of that is in the US.
Now judging from the article above, it would seem that cash flow for Aussie property will be ok. There is a shortage of space and noone has money to develop.
However I am not so sure what is happening overseas so can't say much about what might happen to valuations on these properties.
JP Morgan says there is $9 billion worth of property here in Australia which would cover the share price where it is.
All the overseas property, the funds management and development pipeline is free.
As long as the Aussie properties aren't affected, I reckon GPT should dump all the stuff overseas, close down the funds, sell off the development pipeline, retire debt as soon as possible, sack Joseph and Lyons and get GPT back to being an old fashioned property trust.
However I am not sure that this could be done without considerable loses.
GPT Price at posting:
0.0¢ Sentiment: None Disclosure: Held
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