true yes most of the impact will be temporary. COVID-19 is a...

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Nige456

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17/03/20

13:34

Post #: 43539141
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Originally posted by gragou02: ↑

I'm pretty sure the next step in the process is to order the closing of schools. They'll probably get to the end of this term (in the next few weeks) when kids will be told not come back to school until further notice. Whether that logic will be applied to childcare centres is a little uncertain although I suspect they will be closed along with the schools (I have no insider knowledge here - just my thoughts). If and when this happens the issue of rental income becomes a key element. Can the tenants continue to pay rent, should ARF pressure the position or enable some form of lenience or do the legal components of the lease agreements form the decision for everybody in any case. So the concern, represented by the falling share price, is how much revenue will be lost and/or what sort of bad debt write-off may be incurred. Remember that some of the tenanted properties are leased by "not-for-profit" organisations.
Trying to measure the amount of time any interruption will take and what financial impact it will have is too difficult for me. The key here is their ability to hold up during a period of revenue reduction. Without rambling on about their balance sheet position, I suspect their rental income for the three months to the end of March (about $15m estimated out of half year accounts) would exceed their fixed costs for the six months to the 30th June (about $6m estimated out of half year accounts) assuming no further income is received between 1st April and 30th June. That could result in no dividend this six months as a worst case scenario. They do refer to two large credit facilities that are in place that they could call on should they be needed. The need for that call would probably only be a consideration should the "lay-off" last into the next financial year.

"I can see CV19 affecting people wanting their children to stay home rather than be sent to childcare"

I'm pretty sure these decisions will be made by the Governments and won't get to rest in the hands of the parents. I'm quite comfortable holding at this stage as I estimate any changing situation will be temporary.

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true yes most of the impact will be temporary. COVID-19 is a single nature black swan, so if it doesnt recur, it'll be business as usual for working parents when the virus is gone sometime in 2020. Already gone in south korea, china and hong kong. virus appears to be peaking in italy, maybe in the next few weeks.The reits will get back to where they were at the peak or slightly below. the cash rate is zero, so 5% yield is correct.

The yield will probably get halted from the next quarter(i suspect this quarter will be paid as its from Dec -3 months in arrears)

in the meantime, the shorters and the bear sellers just keep on piling in the shorts. so dont know where the bottom is, already a huge shutdown is factored into the prices, but the selling has been limitless.

Last edited by Nige456: 17/03/20

ARF Price at posting: $1.91 Sentiment: None Disclosure: Held
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0 Great analysis

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