lousy stock, page-23

facts are

1) rate will rise but it won’t be as big as what people think…. Imagine how many people will go bankrupt with million dollar mortgage if rate rise another 3%.. rba will need to weight up between inflation and rise in rate… also, the inflation is caused by many factors and not mainly caused by low rate… simply by rising rate will not solve the problem …. rba knows that

2) building cost is escalating and builders going broke… demand is there for good quality buildings and if supply
cannot catch up , it will reflect in the nta …

3) most reits and Clw are not highly geared, 40% gearing with part of the loan hedged, blue chip tenant, cpi and fixed rent reviews and long wale…. Even if rate rise by 2%, the dividend will not be affected very severely…. Even if dividend drops by 10%, the yield is still attractive

4) worst case scenario, Clw can divest some of its buildings and pay off some debt, with the quality of their portfolio, I don’t think it will be too difficult… they even managed to sell the virgin building at a loss but that’s a vacant building and hence acceptable

5) now maybe the best time since gfc to acquire such high quality reit at such steep discount… the fear over rate is overplayed imo