VPG 0.00% $1.79 vodafone group plc.

gearing on real estate funds

  1. 3,062 Posts.
    commercial property has always been high risk,i guess demand
    predicated against gdp and the materials cpi against
    prevailing interest rates are a good reason,certainly gdp and the general cpi combined with demand have been my personal guide,and i certainly havent got it right 100% but approximately right.

    marked to market valuations combined with financial institutions LVR against cash flow,can turn this sector pear shaped very quickly 100/39,75/52,64/61,,,so as you can see asset depreciation is dramatic against gearing,any income decline or withdrawal of financial support by way of redemption in a marked to market as opposed to an unchanged operating cash flow will have dramatic impact,further impact on cash flows would create liquidity problems as the business model is downgraded and additional int. cost impairment erodes the balance sheet.

    it is not just vpg that is in trouble real estate is not
    very liquid except at a price,and at the big end of town
    it would be even less so,especially given current risks.

    if there are no porky pies in the companys accounts this
    might be one those great opportunities you can tell your grand children about,because it will probably take 5years at
    least for recovery in a world based property group.

    and you can bet gearing will be more conservative.

    these are just my thoughts,the sp. could bring great returns if a general recovery in this sector is seen to be underway.

    i hope it is long and slow so we are able to build diverse
    risk weighted portfolios for the long haul,no better opportunity than the present.
 
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