The Australian Competition and Consumer Commission (ACCC) has quashed Woolworths Ltd's plans for a new supermarket, which the chain fears could set a precedent that would block its hopes of building up to 25 supermarkets a year, according to The Australian Financial Review.

Woolworths may challenge the decision, which blocks the supermarket chain's plans for a new site in a western Sydney housing estate because the ACCC ruled it already has a store in the same suburb.

Although the decision directly affects plans to acquire a development site at Glenmore Ridge, where the chain had hopes of building a 3,200-square-metre supermarket and specialty shops, Woolworths is especially concerned that the ruling could be precedent-setting and weigh on plans to expand its store numbers aggressively.

“Woolworths already operates the only supermarket in the suburb of Glenmore Park, and it has the next closest supermarket located in the nearby suburb of South Penrith,” ACCC chairman Rod Sims said, according to the AFR.

Competition lawyers reportedly said the ruling could affect the issue of creeping acquisitions and the extent to which supermarket chains will be allowed to expand site-by-site.

It is often said those who fail to understand the mistakes of the past are bound to repeat it. In one area, this holds spectacularly true: the residential real estate market. History has shown time and again the fortunes of Australians are closely linked to the housing sector, with bricks and mortar generating a great deal of prosperity and despair. Long-term trends in property prices provide for a fascinating understanding of the housing cycles that have occurred since the 1880s.

Unfortunately, commentary on Australia’s housing market has become notoriously short-termed; articles appear in the mass media on a daily basis examining equally short-term trends. The most obvious example is the RP Data-Rismark Daily Home Value Index‎, measuring capital city housing prices movements on a daily basis. Given how slowly the real estate market moves, this index appears to be little more than a mesmerizing bauble telling us little about what matters most: the long-term trend in housing prices. Perhaps an hourly index is the next ‘innovation’ to come out of the research pipeline.

The longest data series pertaining to housing prices was produced by Nigel Stapledon, a former chief economist of Westpac bank who now teaches in the economics department at the University of New South Wales. In 2007, Stapledon completed his PhD on the history of the residential property market, yielding a rich goldmine of housing-related data and analysis (well worth reading). The housing price index begins in 1880 and finishes in 2006, and I’ve continued it through to 2012 with Australian Bureau of Statistics data.

The index is a weighted composite of inflation and quality-adjusted Melbourne and Sydney housing prices, used as a proxy for the rest of Australia as both cities comprise a majority of Australia’s households and price movements very closely track that of all other cities. It is therefore more representative of the national residential property market than, say, major cities in the United States, which is composed of many more cities with widely differing regulatory and cultural environments. This index also helps to overcome the deficiencies of the popular ABS measure, which has quite a few faults that render it somewhat inadequate.

The ABS series uses a stratified methodology which controls for some compositional changes but doesn’t adjust for improvements in the quality of the housing stock, and is segmented into two time series (1986-2005 and 2002-2012), with the former series not statistically adjusted to conform to the methodology of the latter series. Neither is the series adjusted for inflation using an appropriate deflator (both nominal and real data sets would be useful) and it measures only detached dwellings, excluding apartments, units and townhouses.

Probably the most interesting cycle was the colossal land boom of the 1880s, followed by the equally large bust of the 1890s, a period of euphoric and very irrational expectations. A speculative mania spread like wildfire among Australians, centred in Melbourne. A bubble in commercial land prices formed, feeding into the residential property market. From 1887 to the peak in 1891, housing prices increased by 32 per cent, only to collapse by 31 per cent over the next half a decade. The bursting of this enormous land bubble resulted in the worst depression in recorded history.

Prices remained stagnant until the early 1920s before lifting by 25 per cent, only to fall once more during the Great Depression. The housing market again stagnated, tracking the rate of inflation. Price and rent controls were introduced later in 1942 during the Second World War, leading to the single largest annual escalation when they were lifted in 1949, of 111 per cent. Housing prices then fell by 26 per cent as the market later readjusted and stabilised.

It took until the late 1960s for the FIRE (financial, insurance and real estate) sector to reassert itself after its devastation during the Great Depression, laying the groundwork for a simultaneous commercial and residential property bubble. Housing prices increased by 70 per cent from 1961 to the peak in 1974, then fell by 16 per cent to 1979 during the midst of a recession. Melbourne was the primary contributor to the bubble, with Sydney playing a smaller role.

The 1980s was a turbulent period, experiencing five asset bubbles: two smaller residential, one colossal commercial, later feeding into another residential, and also the stock market bubble and collapse in 1987. Housing prices escalated by 39 per cent from 1987 to 1989 on the back of the well-known commercial bubble, again resulting in an economic downturn during the bust. The early 1990s recession was the culmination of the worst financial collapse since the 1890s depression.

The residential property market stumbled along for several years, and then quickly accelerated into the largest boom on record. From the trough in 1996 to the apparent peak in 2010, housing prices increased by 123 per cent. This run-up in prices is what has generated the debate over whether the market is either overinflated (a bubble) or based upon fundamental factors: a housing shortage, growing population, restrictions on land supply, rising household incomes, etc.

Historically, every boom in prices has been followed by a downturn, either reverting to mean or undergoing a partial adjustment. Not every bust, however, has fully reverted to the mean, which explains the gradual upswing in the index from the late 1940s onwards. If history serves as a guide, it teaches an important lesson that caution must be taken against expectations real housing prices will always continue to rise. Past trends cast serious doubt upon the constant FIRE sector claim prices double every seven to ten years.

By examining the long-term trend in the housing market, we can come to one of two conclusions. The first, unpopular conclusion is residential property is in bubble territory and ready to burst – a pattern repeated continually in Australian economic history. This position is considered a fringe perspective today, and is most notably advocated by economist Steve Keen and yours truly, among a handful of other public commentators.

The majority view among government, the FIRE sector and property owners, however, is prices are based upon fundamental factors, meaning a substantial fall or crash will not occur. In this case, it may appear “this time is different” and that “prices have reached what looks like a permanently high plateau,” quite possibly the two most poisonous phrases uttered in economic history. With the passage of time, it will be fascinating to see which side is ultimately proven to be correct.

Philip Soos is a research Masters candidate at the School of Management and Marketing, Faculty of Business and Law at Deakin University, and is a researcher for the Land Values Research Group, Melbourne.

By a staff reporter, with AAP

The demand for home loans missed expectations in April, according to the Australian Bureau of Statistics.

The data showed the number of home loans granted in April lifted a seasonally adjusted 0.8 per cent to 48,475.

The result compares to an initially reported 48,071 in March.

Bloomberg had expected the number of housing finance commitments to rise by 2 per cent in April.

Total housing finance by value fell 0.2 per cent in April, seasonally adjusted, to $22.749 billion.

Commonwealth Bank senior economist Michael Workman says the figures are still a bit weak.

"The general tone of the data is for a pretty modest upswing in loans by value and the number of loans," he said.

"Its pretty much in line with the soft consumer confidence numbers at the moment.

"In answer to questions consumers are saying it's a good time to buy a dwelling, they're pretty modest at committing themselves to borrowing."

Mr Workman said there was hardly any growth in the number of new home buyers taking out loans, probably because most government assistance programs have ended.

He said the growth in the number of people trading up to more expensive housing appears to be restrained because of uncertainty about employment.

"The tendency is still for people to pay down existing debt rather than take on new debt."

Mr Workman says the housing finance figures would add to the case for two more cash rate cuts by the Reserve Bank of Australia before the end of 2013.

By a staff reporter

Charter Hall Retail Management, an entity of Charter Hall Retial REIT Ltd, has declared a distribution of 13.5 cents for the first half, ended June 30.

In a statement to the Australian Securities Exchange, the group's full-year distribution of 26.8 cents per unit for represented a 2.7 per cent increase on the previous financial year.

The date of record for Charter Hall Retail shareholders is June 28, with payment expected on or around August 21.

"The increased distribution reflects the continuing strong performance of the REIT's resilient non-discretionary Australian portfolio,"Scott Dundas, fund manager of Charter Hall Retail REIT said.

By a staff reporter

Dexus Property Group Ltd has announced it expects a lift in earnings for the 2014 financial year following strong independent valuations.

In a statement to the Australian Securities Exchange, Dexus said it expected a 5.2 per cent increase in earnings in 2014 compared to its forecasts for the previous year.

Chief executive officer Darren Steinberg said the group expected to pay 8.15 cents per security for the year ending June 30 2014, a 5.2 per cent increase on 2013 estimates.

The group said property valuations for the quarter to June 30 had seen a 4.4 per cent increase of $58 million on prior book values.

“The uplift in independent valuations has been driven by our proactive approach to leasing which has delivered results across both office and industrial properties in an uncertain and challenging market," chief executive officer Darren Steinberg said.

“This latest round of independent valuations provides further evidence of cap rate compression in quality properties that have income security and sound fundamentals.

Mr Steinberg said the group expected continued growth despite uncertainty in the market due to the current economic environment.

"Our portfolio is well positioned for solid growth underpinned by strong like for-like office income growth and an expected increase in trading profits," he said.

The current stock market turmoil gains the headlines but our sleeper is the Australian housing market, which on a global basis has suffered a considerable correction.

As a result, the lower Australian dollar and the record-low interest rates have the potential to boost the house prices markedly.

Australian house prices have been much higher than the US for many years but over the last 12 months we have seen the gap narrow by more than 20 per cent (New home sales hit 18-month high, July 3).

According to the Knight Frank global house price index, Australian house prices over the year to March 31 have risen 2.6 per cent while US house prices have risen by 10.2 per cent. But the Australian dollar has fallen almost 15 per cent – we have taken part of the value correction on the currency’s chin.

Our biggest overseas buyers of housing are the Chinese and as I pointed out last month (Haunted housing, June 26) Beijing, Shanghai and Hong Kong dwelling prices have risen by between 23 and 28 per cent in the year to March – around 10 times the Australian rate. Add to that the Australian currency decline and that means that our dwellings have fallen well over 30 per cent compared to the major Chinese cities. Those Chinese who invested here have been battered in the last year, particularly when compared to the home market. We can therefore expect the Chinese nervousness in the Australian dollar currency market to curb house buying interest in the short-term. In time the better value will re-kindle interest.

And the vast number of unoccupied dwellings in China would make any Chinese property investor want to hedge bets.

Australia is going to see a change in geographic growth emphasis as the mining investment book runs down and some mines are shut. The action returns to the eastern states including Brisbane despite the Queensland coal problems.

If the election results in a clear majority I think we will see a rise in confidence as our low interest rates start to kick in, helped by the lower dollar.

According to BIS Shrapnel it will be the Sydney housing market that will start to rise first. I think they are right because our largest city has the most pent-up demand. But Melbourne and Brisbane will also follow once Sydney begins to move.

When the housing market starts to rise it multiplies confidence in communities. That will, of course, halt interest rate reductions but I believe that the stimulatory boost that comes from lower interest rates has gone. In fact at current levels lower interest rates can have the reverse affect because they make people nervous and become simply a way of transferring wealth from savers to borrowers. And the savers are older people who, unless they have substantial savings, are also spenders – and they are adjusting their housing to suit their different lifestyles.

On a global basis, we have seen a substantial correction in the Australian housing market, which when there is political stability, should stimulate activity.

By a staff reporter

New home sales hit an 18-month peak in May, raising hopes a recovery in the building sector may assist a wider rebalncing of the economy, according to the Housing Industry Association.

The HIA New Home Sales report shows the total new home sales lifted a seasonally adjusted 1.6 per cent in the month.

Detached house sales posted modest growth of 0.9 per cent on strong gains in three of the five mainland states.

HIA sais detached house sales increased by 4.3 per cent in New South Wales, 8.8 per cent in Victoria, and 6.9 per cent in South Australia.

Detached house sales fell by 2.2 per cent in Queensland and by 10.3 per cent in Western Australia.

Meanwhile, multi-unit sales grew at 5.7 per cent in the month.

HIA chief economist Harley Dale weclomed the upward momentum, saying it was a pleasant turnaround from the "low depths" of 2012.

"A range of housing indicators, including new home sales, suggest Australia experienced modest growth in new residential construction in 2012/13, with some momentum in activity set to carry into the fresh financial year," Dr Dale said.

"That outcome was important, following as it did a sustained period of weakness which saw activity in a majority of markets reach historically very low levels."

Dr Dale said the key moving forward would be to see whether a new home building recovery can be sustained, and at a growth rate sufficient to meaningfully assist the Australian economy with its rebalancing acts.

"We won’t get that required outcome while policy makers continue to assume that super low mortgage rates will do the job all on their own," he said.

AAP

United States home prices jumped 12.2 per cent in May from a year ago, the most in seven years. The increase suggests the housing recovery is strengthening.

Real estate data provider CoreLogic said on Tuesday that home prices rose from a year ago in 48 states. They fell only in Delaware and Alabama, while all but three of the 100 largest cities reported price gains.

Prices rose 26 per cent in Nevada to lead all states, followed by California (20.2 per cent), Arizona (16.9 per cent), Hawaii (16.1 per cent) and Oregon (15.5 per cent).

CoreLogic also said prices rose 2.6 per cent in May from April, the fifteenth straight month-over-month increase.

Steady hiring and low mortgage rates have encouraged more Americans to buy homes.

Greater demand, a limited number of homes for sale and fewer foreclosures have pushed prices higher, but prices are still 20 per cent below the peak reached in April 2006, it said.

Sales of previously occupied homes topped the five million mark in May for the first time in three and a half years. And the proportion of those sales that were "distressed" was at the lowest level in more than four years for the second straight month.

Distressed home sales include foreclosures and short sales - when a home sells for less than what is owed on the mortgage.

Home sales are expected to increase in the coming months. That's because the number of people who signed contracts to buy homes rose in June to the highest level since December 2006. There's generally a one- to two-month lag between a signed contract and a completed sale.

One worry is that higher mortgage rates could slow the housing recovery.

Still, rates remain low by historical standards and increases in rates could boost home sales because many Americans may act to lock in the lower rates before they rise further.

A survey by the University of Michigan released last week found more Americans believe it is a good time to buy a home because both rates and prices are just starting to rise.

Rates have been trending higher for two months.

The average rate on a 30-year fixed mortgage leapt to 4.46 per cent last week, according to mortgage buyer Freddie Mac., the highest in two years and a point more than a month ago.

Mortgage rates surged after Federal Reserve chairman Ben Bernanke said last month that the Fed could scale back its bond buying later this year and end it next year if the economy continued to strengthen. The bond purchases have kept long-term rates down.

Economists say higher mortgage rates are unlikely to stifle the housing recovery.

A more critical issue is whether potential buyers can get loans. There are signs that banks have become more willing to extend mortgages.

The New South Wales (NSW) government is preparing to announce which of two rival casino proposals will be allowed to proceed, The Australian Financial Review reports.

NSW Premier Barry O'Farrell is expected to announce today whether James Packer's Crown Group Ltd proposal for a six-star hotel and high-roller casino at the Barangaroo development will proceed or whether instead Echo Entertainment Group Ltd proposal to expand The Star casino in nearby Pyrmont will be approved.

Ahead of the announcement, the head of the independent panel reviewing the proposals, David Murray, defended claims the process had been unfair.

He said the panel gave equal time and attention to both casino proposals.

“I think that was appropriately run when we look back on it,” Mr Murray told the AFR.

Mr Murray submitted his report to Mr O'Farrell on Wednesday, and was expected to have recommended whether either of the proposals should proceed to a final stage of the approvals process for unsolicited private sector proposals.

Only five months after facing accusations of buying it an inflated price, the Future Fund may be forced to write down the value of its stake in Perth Airport by $150 million, The Australian Financial Review reports.

According to the newspaper, independent valuations of the fund's 30 per cent holding in the airport have priced the stake at $725 million. Earlier this year, the Future Fund purchased the stake for $875 million.

A spokesperson for the Future Fund said the group had not yet completed its revaluation process.

The AFR reports a downwardly revised valuation may bolster a brewing legal case by AustralianSuper. The superannuation fund alleges the Future Fund "gamed" the price of the stake in a bid to make sure the holding was secured.

By a staff reporter, with AAP

Building approvals fell more than expected in May, according to the Australian Bureau of Statistics.

ABS data showed the number of buildings approved decreased a seasonally adjusted 1.1 per cent to 13,781 during the month.

That compares to an upwardly revised 13,932 approvals in April, seasonally adjusted.

Bloomberg economists had expected the figures to show a one per cent decrease in approvals during the month.

Building approvals are now 3.2 per cent lower, seasonally adjusted, than in the same month last year.

Approvals for fully-detached houses rose 2.5 per cent in the month.  

HSBC Australia and New Zealand chief economist Paul Bloxham said the gain was a positive sign for the housing sector.

It shows that other parts of the economy, besides mining, are getting stronger, he said.

"We held onto the gains from the previous month and the detached house numbers are rising solidly," he said.

"This is a sign of gradual rebalancing of growth in the Australian economy."

Mr Bloxham said the other dwellings category is volatile from month to month, and not much should be read into the fall in that category.

He still expects the Reserve Bank of Australia to make one more cut to the cash rate by the end of the year.

"That may be all they need to do because of the fall in the Aussie dollar," he said.

JP Morgan senior economist Ben Jarman said building approvals were improving, but not enough to balance out the easing mining investment boom.

"Those areas of the economy that are sensitive to rates, like building, are starting to pick up," Mr Jarman said.

"The question is, is it picking up enough from an overall growth point of view to offset the drags that are coming through in gross domestic product from your fading mining investment and the like.

"We think ultimately it will fall a bit short of what's required to fully offset the drags that are coming through.

"Housing alone certainly won't make up the difference, other things are going to have to rise too, like non-mining business investment, and that's where the signs are still sort of patchy."

Mr Jarman said lower interest rates were helping building approvals, along with state government first-home buyer incentives favouring new building activity over existing home purchases.

AAP

Perth's office vacancy rate is expected to double over the next few years as the resources slowdown leaves companies requiring less space.

The weaker outlook for commercial leasing comes as companies remain under pressure to reduce costs and more office space becomes available next year.

Miners and mining services companies are also cutting staff at a rapid rate as investment in the West Australian mining sector falls.

Data from the Real Estate Institute of Western Australia (REIWA) shows hundreds of commercial properties are available for lease in the resources-focused business hubs of West Perth, Subiaco and Perth's CBD.

The boutique business districts of Subiaco and West Perth have traditionally attracted small to medium-sized miners and mining services companies while the bigger players favour the CBD.

Perth's CBD still has the lowest office vacancy rate in the country, sitting at around six to seven per cent, but a report by property forecaster BIS Shrapnel shows the rate is expected to increase to around 13 per cent by mid-2016.

BIS Shrapnel's senior project manager Lee Walker said the Perth office market had experienced a sharp turnaround in demand over the past six to 12 months as many resources companies switched from rapid expansion to containing costs.

"This is just the start," Mr Walker said.

"Our fear is that as more completions come on stream in 2014-15 and 2015-16, the vacancy rate will rise more sharply, potentially up to 13 per cent."

However, with new office buildings not due to be completed for 12 to 18 months, it expects the CBD vacancy rate to stay around six to seven per cent over the next financial year.

The BIS Shrapnel Perth Commercial Property Prospects 2013/2023 study shows office employment growth and the take-up of office space is expected to endure a sustained period of weakness over the next three years as construction associated with the mining boom begins to weaken.

Record employment levels and demand for office space during the boom years were underpinned by high investment in construction which had now finished, the report found.

Around half of Perth's CBD is occupied by resources companies or companies which service them.

The Goodman Group and the Canadian Pension Plan Investment Board (CPPIB) have agreed to expand their China Partnership by a further $US500 million ($A545 million), according to The Australian.

CPPIB will cover 80 per cent of the additional funds, which will bring the total commitment by the two sides to $1.5 billion since forming a partnership in 2009 to invest in logistics sheds across China.

“The increased equity allocation of $US500 million will help to fund the continued growth of our China platform through a number of identified development projects for high quality logistics space in the major Chinese markets,” Goodman chief executive Greg Goodman said, according to The Australian.

By a staff reporter

The demand for home loans rose less than expected in May, according to the Australian Bureau of Statistics.

The data showed the number of home loans granted in May lifted a seasonally adjusted 1.8 per cent to 49,636.

The result compares to an initially reported 48,475 in April.

Bloomberg had expected the number of housing finance commitments to rise by 2.2 per cent in May.

Total housing finance by value rose two per cent in May, seasonally adjusted, to $23.433 billion.

Westpac senior economist Matthew Hassan said the figures showed the housing sector was on the road to recovery but that it was happening slower than expected, given record low interest rates.

"Given the degree of stimulus that we've seen, particularly from interest rate cuts, you might expect a stronger recovery at this stage, so in a sense, it's still a little bit disappointing," Mr Hassan said.

"The recovery has been slow to come through and the response to interest rate cuts does appear to have been more muted than usual.

"The question is whether that recovery is strong enough, given the drag starting to come through from the mining sector.

"Given where interest rates are and the requirements for non-mining sectors to pick up the slack from the mining downturn, there's quite a high hurdle here for maintaining growth."

Australian banks are vulnerable to a "looming" house price correction and have the highest exposure to residential mortgages of any financial institutions in the world, The Australian Financial Review reports.

According to the newspaper, Moody's Analytics managing director Tony Hughes says Australian house prices are overvalued.

"Irrespective of the complacency of local analysts, who sound a lot like many US housing cheerleaders circa 2006, this exposure represents a major concentration risk for banks and the Aussie economy," he said.

The high exposure of Australia's banks to home loans was a key concern for international investors, Mr Hughes told the AFR.

By a staff reporter

The RHG Ltd board has accepted a sweetened takeover bid from a syndicate led by Resimac Ltd, put by the group to counter a rival offer from mortgage lender Pepper Australia Pty Ltd. 

In a statement to the Australian Securities Exchange, RHG said it had accepted a counter proposal from the Resimac syndicate of 48 cents per share, an increase of 3.9 cents per share over the original offer.

The board last week recommended a takeover bid from the syndicate, which also includes Australian Mortgage Acquisition Company Pty Ltd, before Pepper Australia launched a rival offer of 46 cents per share for cash consideration.

The Australian Financial Review reports that the revised offer values the company at around $157.3 million.

The directors unanimously agreed to accept the offer, describing it in a statement as "superior for RHG's shareholders as a whole compared with the competing transaction".

RHG, formerly RAMS Home Loans, had its shares placed in trading halt this morning as the group executed the revised merger implementation deed.

Shareholders will also receive a fully franked dividend of 3 cents per share announced on July 8, taking total cash payments to 51 cents per share for investors on the register at both dates.

By a staff reporter

House prices in almost all Chinese cities rose in June, according to data out of the National Bureau of Statistics.

Statistics showed 63 out of 70 cities surveyed recorded an increase in the price of new homes in June, on a monthly basis.

This left five cities positing a fall in prices, while two were unchanged.

In May, 65 out of 70 cities recorded price increases, two were unchanged and three fell.

In terms of existing homes, 55 out of 70 surveyed recorded an increase in price in June on a monthly basis.

This left seven cities positing a fall in prices, while eight were unchanged.

In May, 64 out of 70 cities recorded price increases, three were unchanged and three fell.

FKP Property boss Geoff Grady is cleaning up the mess by a YouTube video apparently revealing the end of the company’s demerger plans. "No, no, no – we’re not saying that just yet, people!" Meanwhile, it could be that Woolworths has a year to convince Lowe’s to stick with Masters before having to go it alone. The opposition is building against the bid for GrainCorp, Billabong is still surging despite some shenanigans from its lenders and APA Group boss Mike McCormack shares his pipeline dream.

FKP Property

FKP Property Group chief Geoff Grady has been forced firmly onto the back foot after a video reportedly emerged on YouTube appearing to indicate that the company was shelving its retirement demerger plans.

The company released a statement to the ASX yesterday indicating that this was not the case and that a demerger is still very much a possibility.

“Since the announcement in February 2012 of the retirement strategic review, FKP has been exploring the options for a demerger or other separation of its retirement and development/trust businesses and has confirmed this to the market on a number of occasions.

“FKP continues to explore these options, based on its overall strategy to streamline and focus the business on its retirement operations in the most cost effective way.”

That’s some mighty fine corporate speak right there. FKP went on to say that it’s considering a name change to Aveo.

This statement was in response to a report from The Australian detailing a video apparently made for FKP staff posted on YouTube featuring Grady that racked up over 200 hits before it was taken down.

“We have speculated about doing a formal demerger of the business and probably let the ball fall away a little bit,” said Grady in the video, according to The Australian.

“We talked about a formal demerger of the business and there are a number of reasons that all got a little bit expensive and we decided not to do it.

“We probably made the mistake of not going back to the market and telling them about that.”

While FKP didn’t so much deny anything that was said in the video, Grady did express dismay that the whole story apparently wasn’t told.

“We are disappointed that selective elements of an internal and private staff briefing have been sensationalised, particularly as the report also fails to provide the overall context of the FKP strategy briefing to staff,” said Grady in the FKP statement.

It’s easy to understand why the Brisbane-based property group doesn’t want to snatch the idea of a demerger away from shareholders just yet. Demergers are the bomb at the moment.

Brambles has decided to demerge its US document management business Recall after failing to find a compelling bid for the unit, which could be worth $1.8 billion, maybe more.

This comes on the back of returning concerns at Treasury Wine Estates about the state of the wine maker’s American business.

While the stock is down 16 per cent over the last five sessions, it’s still up 41 per cent since it was spun off from Foster’s in mid-2011.

Woolworths, Lowe’s

In recent days the ongoing speculation about the losses of at Woolworths’ troubled Masters hardware retail joint venture with US company Lowe’s boiled over.

Yesterday, Masters director Melissa Smith tried to reassure analysts and onlookers that the long-term outlook for the business remains bright, while leaving the impression that Woolworths’ rollout of Masters has lacked competence and expertise in certain areas.

The most common phrase to summarise yesterday’s conference call is ‘mixed messages’.

From a deals perspective, the question has always been whether Lowe’s will tough it out in Australia with Woolworths and Masters, or whether it will exercise its put option on its 33 per cent stake in the chain.

At the moment, Lowe’s has extended the put option by 12 months for October next year.

That means the question of whether Woolworths will have to take on Bunnings, and a larger share of the current losses at Masters, alone has been put off by another 12 months.

But just fast forward to July next year in your head for a moment. If Masters is still struggling for whatever reason – it could be ongoing management problems, strong resistance from Bunnings, a sluggish economy, or even all three – questions about the long-term commitment of Lowe’s will be asked again.

GrainCorp, Archer Daniels Midland

Archer Daniels Midland is finding growing opposition from, well, growers.

Almost 300 farmers reportedly threw their support behind calls from lobby group NSW Farmers for new treasurer Chris Bowen to block the US giant ADM from acquiring GrainCorp for $3 billion.

The calls come as a federal Senate inquiry into the proposal led by conservative Bill Heffernan continues in Canberra.

Bowen has the power to block the deal under the Foreign Acquisitions and Takeovers Act. While the Foreign Investment Review Board will get its say, and its advice is usually headed, the treasurer ultimately has the final call.

But with Prime Minister Kevin Rudd reportedly moving towards an election date in late August, Labor could go into caretaker mode within a week.

Hence the urgency from NSW Farmers.

Billabong International, Oaktree Capital, Centerbridge Partners, Altamont Capital

Billabong International shares rallied again yesterday to finish the session at 36.5 cents. That’s up 43.1 per cent in two days.

The surfwear company released a statement to the ASX more or less confirming what the market had suspected of the ‘offer’ put by new lenders Oaktree Capital and Centerbridge Partners.

The short version is that the pair simply came too late, with something too incomplete, for Billabong to work with. The debt they own, which was only purchased in the last month or so at a discount, will be repaid in full by the Altamont Capital deal.

“Not enough!” was the cry from the scorned lenders. Fairfax believes that the US hedge fund debt holders have threatened to “pull the company under” unless they secure a deal with Billabong that will include an upfront payment of $40 million.

Now let’s not carve this story in stone as fact. But take it to be true, it would make a mockery of the hedge funds’ reported “outrage” at the $65 million break fee as part of the Altamont Capital deal.

Wrapping up

APA Group chief executive Mike McCormack pushed his dream of a national gas grid during a speech in Darwin last night, The Australian reports.

“I would be personally disappointed if connection to the east coast grid doesn't become a reality within about a decade,” said McCormack.

“From a security-of-supply perspective it is an important connection.”

APA is of course making a run at Envestra for a $1.3 billion merger deal. It owns 33 per cent of the target.

Meanwhile, one of Australia’s richest men, Paul Fudge, has built a 10 per cent stake in shale gas owner AJ Lucas. At yesterday’s closing price, Fudge’s stake is worth about $33 million.

Sticking with energy, plans are being made in New South Wales for the sale of the national electricity meter arms of Ausgrid and Endeavour Energy.

Things weren’t so hot for WHL Energy, which fell sharply during yesterday’s session after announcing a $60 million farm-in agreement with an unnamed oil and gas company for its Seychelles project had fallen over.

And finally, Calibre Group has picked up service contracts with BHP Billiton and Rio Tinto worth $30 million apiece.