You said "The concerns at the moment will the "Rent" cover the costs, will the write downs reduce the rent"
ICR is significantly higher now than it was six months or even 12 months ago.
Rental income on new/renewal leases is still on the way up in Australia combined with a decreasing 30 day BBSW rate. All Australian debt is variable and uses the BBSW rate as the benchmark.
Attached is a table showing how much the BBSW rate has decreased within the last year.
Debt was hedged at 100% until the interest rate swaps were unwound with CNP at the beginning of the year at no cost to CER. CER's Aust interest rate expenses are no hedged at about 60% (Refer to 26 feb prsentation)
Same deal with the US portfolio. Although NOI has decreased by a few percent within the last 12 months, the LIBOR has decreased significantly. It now sits at record lows. CER uses the 30 day LIBOR as the benchmark for its US variable debt. After these interest rate swaps were unwound at the beginning of the year, CER had minimal hedging exposure to its variable US interest rate expenses.
Please remember also that CER has predominately supermarkets and other non-discretionary retailers as its anchor tenants that have shown to be resilient in economic downturns.
Yes they got themselves into a bit of trouble but have worked through all their troubles successfully thus far. The debt that they had trouble refinancing for 12 months was Super debt. CER can only lose their equity in Super and nothing more. CER is much more than just Super.
Their CSF portfolio can now pass on profits back to the CER headstock after profit had been quarantined for nearly 18 months. Financiers obviously are comfortable now with the collaterial provided over the financing.
Then we also have Centro Watt REIT, Australian portfolio and stand alone US property investments.
Plenty to look forward to IMO
Cheers
CER Price at posting:
13.0¢ Sentiment: Buy Disclosure: Held
