The bleat from GPT was plaintive, just as it was from Mirvac and Valad on Tuesday and from Babcock and Brown and any number of financially engineered companies.

“GPT is currently trading at a discount to NTA of approximately 50%, which we regard as unsustainable given the quality of GPT’s underlying asset base. The initiatives outlined today, while likely to take some time to execute, are consistent with the objective of GPT’s management team and Board of pursuing a strategic direction that will deliver long-term value for securityholders,” CEO Nick Lyons said in the company’s interim earnings report.

In summing up GPT’s future strategic direction and the underlying rationale, Mr. Lyons said: “The strategic initiatives outlined today will result in a simplified business focusing on the ownership, management and development of high quality Australian real estate, and a more conservative financial structure reflective of the current environment and appropriate for this business model moving forward.”

With much mention of “moving forward,” a phrase beloved of spinners and their desperate clients, Mr Lyons has gone back to the future. It’s a rediscovery of the joys and benefits of being a “simple” business, without complexity: this after making itself very opaque and complex with the help of the geniuses of Babcock and Brown and its discredited management.

Like so many Australian companies who rode the easy money trail and came a cropper, there’s a lot of mea culpas and hair shirts at GPT, but few apologies to investors for seeing the value of their holdings destroyed as the company stood too long and waited for the credit crunch train to run them over.

Before the 2005 takeover battle between Lend Lease, Westfield and the management of GPT and the bright sparks at Babcock and Brown GPT was a safe, boring company, well regarded, with some of the best shopping centre, office building and other assets in the country.

It was a contender with Westfield for its security and performance as a shopping centre operator and all of those advantages and values were abandoned for the “synergies” of joint ventures in Europe with Babcock and Brown and in the US with a company called Benchmark, and for many other poor calls.

For all Westfield’s reluctance to face up to the collapse of the UK property market (except to stark stalking the rival Liberty group), the Lowy run company has emerged as a “winner” from the crunching of the financial engineers, and GPT could have been there beside it.

In its profit announcement this morning, GPT management talked a lot about getting back to basics and to a more simpler structure. There was an operating profit, and like its peers, an unfortunate loss to quickly paper over.

Realised operating income for the half-year to 30 June 2008 of $234 million, full-year guidance of $464 million confirmed

Statutory loss for the six months to 30 June 2008 of $68 million, primarily as a result of non-cash adjustments:

$122 million write-down of goodwill associated with GPT Halverton; and – $222 million (1.5%) net reduction in asset valuations (primarily relating to Hotel/Tourism, the Joint Venture Fund and warehoused assets)

Cash distributions of 11.4 cents per security for the six months to 30 June 2008. Which you had to then read deeper into the report to find this was a 20% drop on the 14.3 cents distributed back when the hay was being made in the pre-crunch days of the first half of 2007.

That means full year distribution will be cut to 20 cents, compared to 29.2 cents in 2007, with the company keeping its development profits to help finance growth and not paying them out to boost returns and make the business look better than it was. Distributions will be based on operating performance.

No wonder the shares trade around $1.61, less than a third the 52 week high of $5.11.

Peter Fray

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