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Investor Newsletter #1 - March 2006

Welcome to our fifth General Finance quarterly investor newsletter.  We appreciate your support.  The purpose of this newsletter is to keep you informed about the company and various financial matters that may interest you. 

Market Slower but House Prices Remain Steady 

The overall housing market is beginning to ease but interestingly, prices are continuing to appreciate in most areas, just more slowly. According to figures recently released by Quotable Value, the average sale price for February countrywide was $324,063. This was marginally up on $321,155 for January and $315,249 for December last year. Estate Agents are commenting that the market in general is quieter, with properties taking longer to sell and fewer people attending open homes. The good news for home buyers and the property market is that mortgage rates have peaked and later on this year we will start to see some mortgage rate decreases.

Our Loan Portfolio

What does our loan portfolio look like?  At 15 March 2006 the total assets of General Finance Limited stood at $7.2 million with $5.9 million being in mortgages and the remainder being our premises and cash assets. Our average mortgage size is $98,330 and all our mortgages are secured against a residential property. Our mortgage assets are divided between first mortgages (48%) and second mortgages (52%). Around 80% of our mortgages are located in the greater Auckland area with the rest spread throughout the country. We do not lend on cars, chattels, commercial property, or residential apartment developments. Demand for short term bridging finance and second mortgages remains firm.

A Typical Loan

A typical type of loan we are advancing is for short term bridging finance, where the borrower is planning to sell the property. We recently funded a property investor and renovator with a four month bridging loan to purchase a property in Grey Lynn, here in Auckland. The property was a little rundown with the buyer proposing to tidy it up and sell it within the next four months. Our bridging loan, which was secured by a registered first mortgage, with the interest capitalised, was ideal for this client. 

Next Interest Payment Date

Our next quarterly interest payment will be made on Friday evening, 31 March.  Shortly after that, tax statements for the 2005/06 financial year will be sent to all our investors.