Well having spoken to Andrew Rosivach on a few occasions and having listened to his questioning of Uncle I would put more faith in him that the Journalist, Bridget Carter., or her "unnamed" Analyst (if I was making these comments I would not want to be named either, lol).
"One analyst, who did not want to be named, predicted asset value writedowns of 10 to 15 per cent for the six months to June 30 and the same again in the December half-year. Hardest-hit would be bulky goods assets, development assets, pubs and retirement villages, he said.
The analyst said while some of the net profit figures could look OK for the full-year results, there would likely be huge falls in earnings per share after the raft of capital raisings."
I would like to know how a 30% decline in asset value would occur and how it would be measured in bulky goods, development, pubs & retirement village assets. If the underlying and trading figures were comparable to the rest of the Australian real world, well then this would not be true as neither any of those asset classes have recorded such drops (currently).
Therefore if no such trading losses have occurred the asset classes could either slightly decrease in value, possibly stay the same, or could slightly increase in value. In other words they are not going to move much in 6 months imo.
Valuing any of these asset classes using a 'capitalisation' rate may show a few percent either way, but certainly not a 30% decrease.
Then on the other hand, if you use the 'comparable' method (and there are no out of line sales eg; fire sales) then how can you get a true value???
As most AREITS are already trading well below their NTA's, can we expect a further 15%-30% discount on sp??? To me, not much thought has gone into this article, and as Hope has rightly pointed out that leaves the entire question of US M2M valuations wide open imo!
Cheers, Pie :)
CER Price at posting:
10.0¢ Sentiment: None Disclosure: Held
