friends of mine asked me my opinion on VCX cuz they got a $30K...

friends of mine asked me my opinion on VCX cuz they got a $30K entitlement. Before i even looked at it, i told them about the GFC, how these commercial property trusts got annihilated because their assets were overvalued but when the crunch came they could not meet their loan obligations for whatever reason.

so my quick look at VCX found the following concerns from looking at their cash-flow statements. Note: experienced shareholders are welcome to respond:

1. each half year, they have a capital expenditure cost of around $200M

2. after deducting this cost, their operating cash-flow is about $120M per half or $250M per annum

3. they have been paying distributions of around $640M per annum due to: (i) sale of properties; and (ii) borrowing money when they have not sold properties

4. as i warned my friends, VCX just devalued their properties by $1.9 billion

5. therefore, if things don't return to as before, such as rising property prices, it seems possible VCX may not be able to borrow money or sell properties at good prices to maintain their previous 16 cent per year distributions

6. based on their operating cashflow (say $250M per annum), they can only pay around 5.4 cent distribution per annum under the new capital structure

7. also, writing down the value of properties can make a loss on the profit & loss statement, meaning no distribution must be paid

anyway, this is a worst case outlook for this stock

comments are welcome