distributions

I appreciate this may not be a good time to talk about distributions but Ord Minnett raised a good point in their daily report today.

They say that 27 of the 29 REITs they cover are due to go ex-distribution (dividend) on Tuesday 23rd Dec. This includes the Centro entities.

REITs normally make an announcement of their distributions five business days prior to them going ex-dist, which would mean Tuesday 16th December... next Tuesday. The day after the refi.

So, assuming all goes well with the refi, we should see a further announcement regarding this from Centro next week.

I wouldn't expect anything from CNP, but as you may remember CER actually made a distribution last half.

As you may be aware, if a trust (like CER) does not make a distribution, it pays a tax penalty equal to the top rate, currently 46.5%. It also loses tax-free status. As you can imagine, there is a fine line between retaining earnings (taxed at 46.5%) and paying it out in the current environment.

As I have said before, CNP relies on income from CER so the separate boards (cough) are going to have to weigh up whether it is more effective to pay out the CER distribution to all holders (51% of which goes to CNP and related parties) or pay the tax and keep the remainder.

It's also unclear whether the tax rules for trusts operate on a half-year or full year cycle. Perhaps someone who is a trust expert knows the answer to this. If it's full year, CER can defer the situation to year-end.

We have to get through the refi first of course.