GLOBAL COMMERCIAL PROPERTY INVESTMENTS

WE OFFER THE GREATEST OPPORTUNITY IN DECADES TO PARTICIPATE IN THE BULK BUYING OF COMMERCIAL PROPERTIES AT A HUGE DISCOUNT.

I am sure you are aware that there has been the greatest financial crisis since the Great Depression. This has given rise to the greatest OPPORTUNITY for intelligent investors to acquire property shares at a discount and earn a passive rental income stream off them.

This income stream is far superior to putting your money in the bank or in government bonds overseas.

HOW DID THIS OPPORTUNITY ARISE?

The heart of the financial crisis was residential housing in the USA. Banks over lent on residential property and failed when the loans went bad. Central banks of the world printed money to re-capitalise the banking sector.

The problems in the residential property market spilled over into commercial property because of a lack of credit in the financial system.

Most property companies carry debt and because the world banks failed credit was very hard to obtain. It is still not as easy to obtain as it was before. However the stock market assumed that the property companies would not be able to roll over their debt and refinance when it came due.

There was also a concern that their lenders would foreclose on them due to the fine print in the loan agreements based on property paper write downs, not because the loans were not being serviced.

PROPERTY SHARES BECAME REGARDED AS NOT SAFE TO INVEST IN!

This resulted in property share prices collapsing because of the market assumption that all property companies would have to SELL THE  MAJORITY of their buildings at fire sale prices.

THIS HAS NOT HAPPENED!!

WHAT DID HAPPEN is the global property companies sold off SOME of their assets to pay down their debt, got fresh capital from shareholders, reduced dividend payouts to pay down debt and renegotiated with existing lenders or borrowed at higher interest rates from new lenders. 

THEY HELD ONTO THE MAJORITY OF THEIR ASSETS SO SHAREHOLDER EQUITY (VALUE) HAS BEEN MOSTLY PRESERVED !!

Tenant occupancies in quality property portfolios are still over 90%. Buildings are not all standing empty.

As a result share prices of these companies have been rising steadily from the March 2009 lows.

WHERE ARE WE NOW?  We have global property companies that have stabilised their capital structures and no longer need fresh capital or have to sell buildings to reduce debt.  They are also still paying dividends!

PAPER WRITE DOWNS OF BUILDINGS:  Since August 2007 when the crisis started the appraisers that value the buildings on the books have been writing them down on paper every financial reporting period to reflect the current market value as if they were sold TODAY in a very distressed environment. 

In fact they are now reflecting the “CURRENT MARKET VALUE” of the buildings on the balance sheet AT BELOW THE REPLACEMENT COST TO BUILD THEM !!

THE VAST MAJORITY OF THESE PAPER WRITE DOWNS HAVE NOT BEEN REALISED AS THE MAJORITY OF THE BUILDINGS HAVE NOT BEEN SOLD !!

THE REVERSE OF WRITE DOWNS - ASSET WRITE UPS will occur in future and increase the value of these shares!! The leftover debt that the companies have on their books will actually be quite useful – it will ensure a disproportionate increase in the fair value of the equity for a WRITE UP of the buildings on the books.

When you buy shares in one of these global property companies you get exposure to different geographical areas and currencies in one BULK buy. One of the companies that we and our clients invest in has over 30 office blocks in the USA, Australia,Europe and Japan!! - see link:http://www.google.com/finance?q=ASX:cqo.

Charter Hall Office REIT - formerly Macquarie Office Trust is currently conservatively worth 44c per share (18/05/10) and pays 1.85c a year per share in dividends. At 29c a share (18/05/10) it yields 6.40% pre tax pa. 

This business will be worth more than 44c in future. Based on the companies current balance sheet a 10% increase in the properties will result in approximately 22.25% increase in the value of the shares - (i.e.) they will be approximately worth 54.01c per share.
Please open the attached excel asset write up spreadsheet below to verify this.

To see their massive property portfolio click on the link below: http://www.charterhall.com.au/Office-REIT-Property-Portfolio

Just a final point on the hidden value in Charter Hall Office REIT.

The American office blocks constitute 43% of the entire property portfolio by equity value. However the current construction cost to rebuild the American portfolio from scratch is 34c per share and to acquire the land it stands on is 5c per share - so the total cost to replace just the American portfolio is 39c per share !!

However as at (18/05/10) the entire property business could be bought for 29c per share on the share market !!  Calculations on other undervalued property companies will produce similar results.

It is also significant that the new manager of the property portfolio, Charter Hall Funds Management LTD acquired over 7.5% of all the issued shares (365.4 million shares @ 30.5c) on the 12/02/10. Why would they invest 111 million Australian dollars if they - the new managers could not see value and potential to increase that value by good management ????

Like Charter Hall Office REIT all  our investments are transparent and can be independently researched.

WE CAN BUY A STAKE/SHARE IN THESE BUSINESSES in some instances at 50% below what they are worth today after 2 years of asset write downs and as a result get annual NET RENTAL yields after servicing debt of between 6% and 15% pre tax pa.

WE PROPOSE:  That clients buy into a maximum of 15 selected property companies and collect a PASSIVE INCOME VIA ANNUAL DIVIDENDS and wait for the market price to narrow the gap to fair value and for the fair value to increase with asset write ups.

THE INCOME STREAMS FROM THE PORTFOLIO WILL COVER ALL OF THE MANAGEMENT FEES (1% pa) AND CLIENTS WILL RECEIVE A POSITIVE CASHFLOW PER ANNUM.

There is no other way an ordinary individual can benefit from all these undervalued properties.

CLIENT FUNDS ARE HELD IN THEIR OWN SEPARATE ACCOUNTS AT INTERACTIVE BROKERS (A regulated US Institution) – we merely provide the intellectual capital. See link:http://www.interactivebrokers.com/ibg/main.php

PLEASE OPEN and PLAY AROUND with the attached ASSET WRITE UP EXCEL SPREADSHEET based on Charter Hall Office REIT. This will illustrate the great potential going forward!!  

Also see the latest operational update on Charter Hall Office (CQO) that is attached below.