my revised nta calc arrives at 1.711, page-2

Hi Aras

Thought Id move your query on the other thread to this one!

I actually wouldnt mind the PR role. Alicia at investor services is I think getting a bit tiresome of my emails. Ive asked a few quicy questions but theyve been playing their shots with a defensive straight bat.

OK with regards to the impairment charge, you make an excellent point. Ive checked the 29/08 presentation and they wrote off US$300m, which equated to at the time A$317m (exchange rate of 0.96).

The AUD seems to have picked up pace in the last week. Lets say its 0.75 by year end, the amount that would be written back is US$300m / 0.75 = A$400m

The accounting entry would be a debit of A$400m in non-current assets and A$316m would be written back (credited) against the impairment charge made at 30 June, the remaining A$84m would be either credited to an asset revaluation reserve or written back against US properties that were written down at 30 June.

As there was a significant writedown of US assets at 30 June, the most likely outcome would be an additional increase in $A income of $84m.

An additional A$84m income equates to an additional NTA value of (84 / 2.2b shares) = 3.81c

If the exchange rate is 75c at 31 Dec, then yes the value of the US properties will increase by a lesser amount in AUD terms.

The net increase will be as follows:

31 December 2008

US$6.1b x (1-0.05) = US$5.8b

US$5.8b / 0.75 (assuming exchange rate of 0.75 at 31/12) = AUD$7.73b

US$3.6b / 0.67 = AUD$4.8b

Net US assets in AUD = AUD$7.73- AUD$4.8b = AUD$2.93b

Increase in Net assets = AUD$3.43b – AUD$2.93b = AUD$0.5b

AUD$0.5b/2.2b = $0.227 increase in NTA

This also would be booked as income as the writedowns made at 30 June were much larger than the A$500m that will need to be written back.

So we have $584m (500 + 84) that will directly improve the bottom line.

Income will be even higher if the exchange rate can stay at 0.70.

So instead of 40c, NTA would only increase by 22.7c, a 17.3c difference.

This would bring NTA down to $1.54

You will then need to add the 3.8c (as calculated above) as this wasnt included in the original calc.

So NTA would be just shy of $1.58.

With regards to your last point, we will just have to wait and see. Interest rates have come down by 300 basis points. The last time interest rates fell by 300 basis points in a half year was back in 1991 I think (I was in grade 4 so dont really remember!)

I'm going to write another email to Alicia and tell her about this and also let them know that their yields are already significantly softer than WDC, which doesnt make sense as Centro's business model ensures they outperform the sector during a recessionary period. Compare the third quarterly reports between CER/CNP and WDC for evidence of this. The yields should not be greater than WDC.

If a stabilisation plan is officially put in place 15 Jan and CNP/CER do not need to sell properties within the next year, then this should harden the cap rates.

I may perform a sensitivity analysis at some stage and change variables such as exchange rate, write down in properties etc.

What are your thoughts aras or anyone on here for that matter?

Cheers