my revised nta calc arrives at 1.711, page-45

Wow I dont hold any CER, however work in the property industry and they have become quite interesting.

Unfortunately I still need to study the mechanics of the whole thing a little more before making much of an input.

A few things that I will say;

Guys property values dropping by 5-10%, I would say that this is absolute best case scenario. I think you should be adding at least another 10% to those falls. Almost all potential purchasers arent buying, most are trying madly to reduce debt levels and the only ones with money (tending to be vulture type funds) are sitting on their hands and waiting for others to move.

The other thing is that allot of the big investors are being forced out of property at the moment given the drop in the value of equities. Most large super & financial portfolios have allocations to property of somewhere in the vicinity of 1-10% (maybe 15%). With the drop in the value of their equity portfolios I think these allocations would be well above their stated targets. (I personally think this is a reason for some of the crazy selling in the AREIT sector recently)

You have seen most of the major players raising large amounts of capital, which has been used for debt reduction, rather than acquistion of property. This is telling me that the big guys really do think that property values have further to fall and that credit markets will not be bouncing back any time soon.

I for one would like to see what happens to your NTA calcs with a 20% drop in the value of the portfolio in the US (probably not as large in Aus).

What is CER's interest coverage ratio? I personally dont care that much about LVR (unless there are major iminent breaches) as I dont beleive that banks want to take property onto their balance sheets or promote a spate of fire sales. In the UK banks have been very reluctant to foreclose and try fire sales. This is because they know as soon as they start doing that it will make much larger problems for them all, as valuers will then have some real benchmarks to which they will be writing property values down.

Now after all of that negativity, a couple of potential positives.

The yield to debt spread is becoming very attractive to people, especially if you can create a blind fund that is going to be focussed on distribution. (all be it margins are still high)

Smaller and middle tier investors (councils, governments, charities, colleges etc) will be more reluctant to move to hybrid, overly structured investments in the short term, given what has just happened to their investments. I think this will push allot of them further into property. After all its bricks and mortar, which you can drive past if you want.

There are some signs (this is purely my view and hence maybe a total sham) that people are beginning to start to move on funds and properties in the UK. For the last 6 months you really werent hearing about many deals (if any) at all. Now you are starting to see a few people getting their money out to buy impaired property funds, high yielding assets & quality repriced assets.

The main thing for my mind in the CER story is the following:

ICR
Vacancy Rates and the trend over the last 12months
Trading Performance
Debt Cost and short term future predictions (translated into their effect on cashflow)
Arrears..... (this is almost the most important one at the moment). In the end if 10% of their tenant base go bust it spells large problems, especially considering the most likely tenants to go bust in the current climate will also be the tenants paying the highest rates per square metre!!!

If people can fill in the above information the investment decision will be clear. (Sorry I dont have the time to at the moment)