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valad denies high exposure to britain

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    Florence Chong | February 27, 2008
    VALAD Property Group, which expanded aggressively into Britain before its property market turned sour, says that just 20 per cent of its assets are located there.

    Valad executive chairman Europe Peter Hurley said yesterday he had heard quotes that 60-70 per cent of its business had been British-based and was therefore exposed to the looming market collapse. But he said 20 per cent of all assets under management, and 25 per cent of properties owned by Valad, were located in Britain.

    Australia and New Zealand remain its main markets.

    Mr Hurley said three British properties had been sold at values higher than what Valad paid in July last year.

    "Our assets are highly yielding," he said, adding that there was strong competition from high-net-worth individuals for those assets.

    Valad launched a $1billion UK Opportunity Fund last month in response to demand from investors from Asia Pacific.

    In the six months to December 31, Valad raised more than $2billion in debt from seven banks and since then has gathered a further $400 million.

    Valad's executive chairman, Stephen Day, said all its loans were asset-backed. "There are no indemnities or guarantees and none of our facilities are subject to cross collateralisation," Mr Day said.

    The trust reported underlying earnings of $74.7 million for the first half - up 139 per cent on the previous corresponding period.

    Goldman Sachs JBWere property analyst James Cornell said the earnings mix had been skewed to include a higher reliance on development and trading-related profits.

    Mr Cornell said these earnings made up 9 per cent of its total earnings in the first half, forecast to increase to 20 per cent in the second half.

    Mr Day said development had been Valad's business for the past 13 years and a fundamental part of its British business (Scarborough) for 30 years. Development and trading contribute 10-20 per cent of its corporate earnings. He said the targeted margins on its developments were 15-20 per cent.

    Distributions for the first half were 6.25c per security, up from 5.4c, and underlying earnings per unit were unchanged at 5c.

    Valad's securities gained 7.43 per cent, or 6.5c, to close at 94c a unit yesterday.
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