Ann: Berlin Update, Registered Office and Secreta, page-4

re: Ann: Berlin Update, Registered Office and... Hi guys,

At face value it is a bit negative, but on reflection I think the downside is limited.

The loan is non-recourse and asset specific (as are all loans until the end of financial year 2011).

If the LVR has breached 75% and the last valuation of the building was Euro 73.6 mill as of 31/12/08;

Thus (assume loan is exactly 75% of building valuation) then the MAXIMUM downside to MOF is $18.4 mill Euro ($32.3 mill AUD).

If the bank gets too heavy handed then MOF walk away and the bank have to manage/ sell the asset. Just as is the situation with Quintana in the US.

We are already seeing a collective reluctance from banks to take and sell assets now as a domino effect would be created in downward pressure being applied to the banks other commercial real estate borrowers via asset revaluations; creatinga positive-feedback loop; ultimately resulting in bank losses.

An example of 'creative thinking' is the recent JV between VPG and BOS.

I am sure MOF will negotiate terms that will be better than the worst case scenario of -$32.3 mill AUD loss.

Look at the SP... these types of events are factored in - surely... I would not be surprised if a few more pop up in the next several months.

I'm happy to have added 550k @ 0.195 yesterday for MT/ LT hold. Just look at the current metrics:

Annualised distribution yeild = 15%
SP % of Huntley's 'Fair Value" = 40%
SP % to 31/12/08 NTA* = 31.7%
Balance Sheet Gearing = 36%

E*Trade broker recommendations:

2 x Strong Buy
2 x Moderate Buy
3 x Hold
1 x Moderate Sell

(* I realise NTA will fall with FY09 report)

Cheers
John