Beware the financial press falling over itself to heap praise on financial engineers – which is exactly what happened after yesterday’s Babcock and Brown results.

Phil Green was at obvious pains to distance his millionaire factory from the likes of Allco and MFS with a very rich set of numbers – a net profit of $643 million that meant a bonus pool for the lucky execs of more than half a billion dollars. Nice.

But different strokes for different folks. Rather than lapping up Phil’s damning of hedge funds, I was looking for his commentary on the US residential housing market crash, given that BNB plunged $1.6 billion or so on American flats and condos at the top of the market.

I naively thought there might have been a little write-down in the present circumstances, or at least a careful warning about what might be ahead. After all, there was that little Business Week cover story last month suggesting US residential property could fall by up to 25 per cent – and then it would only be back to its long-term trend.

No such write-down from BNB though – quite the opposite. That profit bottom line looked good, but $100 million came from the simple business of revaluing property upwards.

In the present climate, that’s an amazing achievement, especially as the aforementioned US residential stuff represents most of BNB’s real estate investments. But that thought doesn’t seem to have occurred to the cheer squad.

Babcock and Brown’s accounts show it started 2007 with $266 million worth of real estate held as investment property. It then proceeded to buy another $2.2 billion worth. It “deconsolidated” $739 million, pulled in another $11 million from “assets under development”, threw in $10 million in capitalised expenditure and therefore had a portfolio of some $1.56 billion.

And then, with property prices falling hard and fast in the US and Europe, Babcock and Brown topped the portfolio up with a $100.6 million “net gain from fair value adjustments” – which means they decided it was suddenly worth $100 million more within months of being purchased.

Gee, they really must be real estate geniuses to achieve that sort of performance so very quickly in crashing markets. All hail BNB – and don’t think too much about the numbers.