G’day again reggie,I really admire your optimism & I really do...

G’day again reggie,

I really admire your optimism & I really do hope you’re right. But I fear not. Here’s a previous post, including CER's retailer update. I suggest you read the links, as it will give you s flavour of what is happening in the USA & what is to come.
Also note what Rufrano said in the Australian:
He (Rufrano) said the company's US tenants were asking for rent relief, and the submissions would be evaluated on a case-by-case basis.
"We are making sure we know who is out there and who is looking for space and determining, before we lose tenants, who could be an alternative tenant," he said.
"We are in a difficult environment and we will suffer some more vacancy without a doubt over the next 12 months."

The boss says even more tenant losses to come & rent relief on top for those staying = less Income = lower asset values.
Makes it very tough.

I’m still holding for now, but seriously rethinking my position.

Cheers,

Ned.


Here’s a good example of what I was talking about when suggesting that a lot more of CER’s tenants will fold & walk away from leases (USA chapter 11 bankruptcy laws allow them to walk away from leases at no cost – CER loses tenant, with no compensation). Also if they can’t replace them (& at same rent level), then that centre’s value must fall; thus the writedowns will continue.
So in November when CER gave the Retailer update below, they said 3 of the 16 Circuit city stores had closed with loss of those 3 tenants’ rent. Now they are all closing.(link is Jan. 16 ann)

http://news.cnet.com/8301-1001_3-10144298-92.html

So that’s US$5.8m annual revenue gone from just this one client.

Linens n Things is having a “going out of business sale” 75% off. So that’s another $3.9m revenue gone.
The final group was just $1.1m but that was just for the 8 stores that closed. We don’t know how many other stores are in this group or their potential loss value. Just one of them; Goodys family clothing is also liquidating its 287 stores. How many of these are CER tenants we don’t know.

http://news.yahoo.com/s/nm/20090107/bs_nm/us_goodys_3

This is what will really determine the value of CER; how many of its tenants stay & pay rent & how many close their stores & stop paying rent.

This from today’s Australian;

http://www.theaustralian.news.com.au/business/story/0,28124,24922281-643,00.html

interesting bit:
He (Rufrano) said the company's US tenants were asking for rent relief, and the submissions would be evaluated on a case-by-case basis.
"We are making sure we know who is out there and who is looking for space and determining, before we lose tenants, who could be an alternative tenant," he said.
"We are in a difficult environment and we will suffer some more vacancy without a doubt over the next 12 months."
So management know they will have more vacancies. Trick is to try & guess how many.

Can we find a list of CER’s major tenants in the USA?

Cheers,

Ned.


Retailer Update
A number of retailers in the United States have entered into bankruptcy protection. Under this process, retailers have the ability to reject leases and close stores.
Circuit City
Recently, Circuit City has entered into bankruptcy and is in the process of accepting and
rejecting leases. Circuit City has indicated that they will close three stores (Midway Market Square, Northridge Plaza and The Commons at Chancellor) and has rejected one lease (Valley Crossing) of the 16 stores to which CER has look through exposure. These stores account for US$1.1 million or 0.24% of annual base rental income. CER has a total look through exposure to Circuit City of US$5.8 million or 1.20% of annual base rental income.

Linens N Things
Linens N Things has announced that they are liquidating all of their stores. CER has a look through exposure to 16 Linens N Things stores which account for US$3.9 million or 0.80% of CER’s annual base rental income. Two of these 16 leases have already been rejected(Cortlandt Towne Center and Springdale). CER is currently working with retailers to fill these spaces.

Other Rejected Leases
Since 1 July 2008, eight leases have been rejected within the CER portfolio from retailers
such as Goody's Family Clothing, Steve and Barry's, Vicorp Restaurants, Mattress
Discounters, Whitehall Jewellers and National Dry Cleaners. These stores account for
US$1.1 million or 0.23% of CER’s annual base rental income.