If I do not get an appropriate response, especially with point 4, the torches and pitchforks will be taken out................
Dear Kylie,
I have some further questions in addition to my last email if you could please attend to at your earliest convenience.
1) CER provided look through gearing of 69% in the presentation. What is CER's look through gearing without the inclusion of SuperLLC? I ask this because:
- The SuperLLC investment has mostly been impaired and
- CER's LVR in Super is 82% and
- CER can only lose a maximum of its invested equity in Super and
- Distributions will remain quarantined within SuperLLC during the term of the refinancing agreement entered into in January
The LVR of 69% I believe is misleading in light of my above comments. Having said this, is it in CER's interest to continue persisting with Super?
2) Similar to Super, Is CER's investment in the CSF sub trust quarantined from the rest of the company? Has CER offered any guarantees to financiers of CSF in the event of any shortfall?
3) February 09 sales results confirm that CER's portfolio is operating well in this economic climate as consumers are trending more to discounters such as Walmart, Dollar Tree. Is CER happy with the Feb 09 sales results?
4) Obviously you are aware of the share price. To say it is sickening is an understatement. Obviously you cannot control the share price but how is CER going to restore investor confidence in CER. I know it should be valued significantly higher than at present. Why couldnt CER really hammer down the point in the half yearly that due to the termination of hedging agreements with CNP, CER will realise significantly interest savings on its Australian and US variable debt.
From my calculations the savings are significant. CER can save US$21m per year on interest expenses. Even a drop in NOI will more than be compensated from the savings in US interest.
For Australian debt, CER can pay A$43m less per year to its financiers. As 60% of Australian debt is hedged, this will still translate to about $16m in improvement to the bottom line ($43m x (1 -60%)). This doesnt include February's interest rate drop.
This is significant. Even a drop in NOI will more than be compensated from the savings in Aust interest. A drop in Aust NOI is unlikely in any case due to the second stimulus package, almost 100% occupancy rates and CER's non-discretionary focus.
Why hasnt the above been stressed to the market? As far as Im concerned the ICR is much stronger now than it was 18 months ago. Would you agree with this?
I am passionate and want to see the best for CER. I sometimes think that management's interests are not aligned.
Below are the savings I estimated on US and Aust debt alone.
If you could please respond as soon as possible, that would be greatly appreciated.
Many thanks,
US Interest
31 Dec 08:
Debt Int rate Int expense
Highland Commons.................. 2.9... 1/12/2009... 5.88%...0.17 Lexington Road Plaza.............. 5.5... 1/09/2011... 6.88%... 0.38 Bank Bridge Loan .................664.7 ...31/12/2010... 3.43%...22.80 The Center at Preston Ridge....... 52.5... 31/12/2010... 0.70%...0.37 Revolving Credit Facility......... 252.3... 30/09/2008... 3.20%...8.07
Galileo America LLC............... 77.5....31/12/2010... 2.95%...2.29 Southland Shopping Center......... 44.7....31/12/2010... 2.91%...1.30
Centro NP Residual Holdings....... 361.7 ...1/10/2009... 5.20%....18.81
Village West...................... 12.6 ....10/08/2008... 6.40%...0.81
Bank Facility 300/.................10.3.....1/12/2010... 4.27%...0.44
Marlton Crossing I & II........... 9.2......1/06/2013... 3.44%...0.32
Interest on variable facilities: $55.59m
30 June 2008:
Highland Commons................ 2.9 ..1/12/2009.... 5.88%.... 0.17052 Lexington Road Plaza........... .5.5... 1/09/2011... 5.88%... 0.3234 Bank Bridge Loan ................664.7.. 31/12/2010.. 4.45%... 29.57915 The Center at Preston Ridge..... 52.5.. 31/12/2010.. 6.47%... 3.39675 Revolving Credit Facility .......252.3.. 30/09/2008. 4.45%... 11.22735 Galileo America LLC .............107.3.. 31/12/2010. 4.25%... 4.56025 Southland Shopping Center ........44.7.. 31/12/2010. 4.24%... 1.89528 Centro NP Residual Holdings .......361.7..1/10/2009. 6.47%... 23.40199 Village West .....................12.3... 10/08/2008. 6.95%... 0.85485 Bank Facility 300 .................9.9.... 1/12/2010. 4.32%... 0.42768 Marlton Crossing I & II........... 9.2 ...1/06/2013.. 4.38%... 0.40296
