November 2013 – NEWS

Newsletter

NEWS

When you can measure your career in an industry in decades (GPS has been operating in the Mortgage Industry for over 20 years), there is a certain amount of developed “intuition” and there is really no substitute for experience. Bruce and I regularly reject loans which look OK on paper but they just do not “feel right”.

My “radar” went off at the recent announcement by the Commonwealth Government that it was going to inject another $8 billion or so to capitalise the Reserve Bank. Time will tell if this strategy by the new Federal Government is economically or politically motivated. It did cause me to again review the defensive strategy of GPS.

In essence, the GPS loan book is now filled with residential development projects with a focus on entry level stock or “affordable housing”. If the world economy fails (Chicken Little stuff) then I am confident in the ability of GPS to be able to complete and sell all projects.

My view remains that the Brisbane property market will be stable for the next few years with improved depth of sales. I note that in recent times, all GPS funded projects have achieved sale prices in excess of the valuation amount. This provides me with reassurance about the expertise of our valuers and that the injection of capital into the Reserve Bank is no more than the Government ensuring there is a defensive strategy in place.

COMMENT

Ashborough Pty Ltd – 15 Lytton Road, Bulimba Qld 4171

NEW RELEASE LOAN

Balance in the Loan Portfolio is an on-going consideration for GPS. While we all like repeat Borrowers, (GPS has a policy to further develop and maintain a stable of professional repeat Borrowers) care needs to be taken to ensure that we do not become over exposed to any one or more Borrower at any given point in time.

Stephen Linklater (Ashborough Pty Ltd) is a new Borrower with GPS. I believe Stephen brings a certain degree of experience and knowledge to the GPS Portfolio which will lead to successful completion of this, and future projects.

I believe some of the key features of this loan are:

Valuations are entry level in upmarket Bulimba, 8km east of Brisbane adjacent to the Brisbane River

The Borrower was introduced and recommended to me by a current and respected GPS Borrower

I am currently working with the Project Manager and Builder on other projects where they have established their ability to perform

My view is that the valuer has marked the project down due to the street address. When you look at the proximity to Oxford Street (the adjoining property) and give consideration to the end product having city views, there should only be upside in the valuation figures.

If I could fill the GPS Portfolio with loans like this, I would be a happy man!

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