Changing M2M rules would just add more noise wouldnt it?
Its all a bit of noise to distract from underlying earnings in my view. Who here would have been willing to hedge AUD vs. USD @ 0.85c when it was on the way up? Then M2M would have blown the decision away and hammered hte stock when the AUD peaked at 0.97... then rewarded the decision when it fell through 0.65 ... M2M @ 0.85 - Yay! Oops... M2M @ 0.95 boo we losing money.... (everyone forgets about the gain on the way up though)... then M2M back at 0.65.. Yay we're in the money... funny money at that.
... at the end of the day having lots of small tranches of debt in several currency baskets maturing at several different times ought provide a natural hedge against various currency fluctuations over time.
I just wish there was a clearer way of accounting for it. Im not sure M2M its the best system or not, but tweaking with the system is no solution to current problems either.. that would just be more noise in my view!
With regards to asset sales... If asset sales are so needed, what is acceptable gearing levels these days? GPT is sitting in the low 30%s ... and the market has taken a blow torch to the company's value.
Imagine, if 20% gearing was to be the norm now.... well, Real Estate has never worked on 20% gearing to my knowledge, and that would require either alot of cash from buyers OR tremendous asset writedowns across the board, including commercial and residential properties...
That would mean to buy Melbourne Central, which is valued at about 1.1b on the books, the buyer would need 800m+ in cash to buy it... if 20% gearing was "the norm" ... I dont think too many RE buyers would entertain such a deal - meaning that either asset prices come down MASSIVELY - or sellers hang in and wait for the money-landlords (bankers) to be ready to rent their product again (read: write loans).
The only reason for asset prices to fall is due to lack of buyer funding... its a stupid cycle and one that will end over time... my view has consistently been that GPT has no pressing need to sell (other than perceived confidence), has no money due for 18 months, and more than enough interest to satisfy the money landlord when the next money rental contract is up for review (read: Bankers) ... I continue to hope they will not panic, grow some stones and dig in stubbornly, and get on with managing their portfolio.
I hope they even make a cheap acquisition or two themselves, instead of appearing as such fearful cowering directionless muppets.
Our banks are still happily throwing 90% - 100% gearing at residentials which have half the yield of the commercial sectors - it seems obtusely out of whack to me - I have repeatedly failed to make any sense of it.
/end rant I never planned on having!
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