Ann: Announces Sale of Northbridge, WA , page-38

Kasper,

You ask me to do my homework yet you obviously have limited understanding of your subject.

My background is commercial property and commercial property finance. I liase with senior professionals inside the corporate property lending departments of the banks and commercial valuers.

Where on earth did you get the idea that if you are servicing your interest bill, the lender's LVR position is not a life threatening matter.

I can assure you the the banks (the majors at least) are sitting on the edge of their comfort zones and any further deteriation in LVR's will see clients being forced to sell or forced to get into the market and raise fresh equity. And by the way, your interest cover ratios are from looking in the rear view mirror,what happened last year. Wait until you see what the banks have gouged out of their client's
P&L's through much higher margins and fees. 2008 accounts should be a real education for you.

The second error you make is assuming that because your rent agreements still have plenty of time to run, the rent levels cratering around you does impact on your own property valuation. Buddy, you need to study up a bit, it may keep you at the better end of the valuation range but the range you are operating in moves with the market and matey, its moving down as we speak.

Given the market is almost non existent for absorbing any meaningful sales volumes at the big end and thus selling is not a real option without being blown up, it follows that whenthe banks have had enough (coming to you real soon) you can bet the LPTs will be back in the market doing capital raisings and/or private equity injections to keep the banks at bay.

If propery was at its bottom now, you could probably say that a good many LPTs will ride this out with the support of their bankers (while the bank enjoys gouging their income streams for themselves) but unfortunately market evidence is emerging (as has been predicted by the industry professionals) that rent are cratering and vacancies are climbing. Valuations must therefore be heading down to a new lows. Banks will not sit there without acting while their exposures move to 80%LVR's + on commercial property and much lower in many cases. Their clients will soon be either selling properties with a new keeness (currently absent) or will be doing big freash share issues in the market.