rough estimate nta 40c 30 june 2009

Below is a rough estimate of NTA

I reckon thats just about it in terms of writedowns. Cap rates have moved out to 8.4% in the US even though occupancy rates have been stable and NOI has only slightly decreased in the last year.

Its Non discretionary properties are still doing very well. Its largest tenants: Walmart, Kroger, TJX and Dollar Tree are reporting increased year on year sales.

The aust portfolio from an operational point of view is travelling exceptionally well. The fiscal stimulus package coupled with low interest rates has seen occupancy levels remain at 99%, retail sales increase and rental income on new/renewed leases increase.

Its important to note that there are no LVR COVENANTS in the US, only ICR.

We have become obsessed with LVR in Australia but in the US it is not a primary concern.

With 1 month LIBOR at record lows in the US, the cost of debt for Centro is much much lower than 18 months ago. LIBOR is the benchmark used for all Centro US debt.

Going concern risk is almost negligible now thanks to the stabilisation plan announced. If CSF financiers were so concerned with the CSF trust holding, Im sure profits within CSF would still be quarantined and not unlocked as announced a few months back.

AUD now above 83. We all know what the benefits of an increased AUD is......



Anyway below is a rough rough estimate of NTA

US writedown: $756.8m (as per ann)

US writedown $756.8/0.69 (exchange rate at 31 Dec 08) = $1.1b

1.1b / 2.3b shares = 47c writedown



Aust writedown = $85m (as per announcement)

$85m / 2.3b = 3.7c



Total writedown of assets = 50.7c


FX writeup/movement in AUD to 81 = 15c

I have played around with the hedge liability spreadsheet that I emailed to quite a few of you a while back. (I can email this to you if you wish) I have revised the assets figure

The writeback will be larger now than previously calculated as a result of the reduction in the gross asset value from $5.4b to $4.7b.

Total writedown = (50.7 - 15) 35.7c

NTA = 36.3c (72c - 35.7c)

Add income of around 4c for HY = NTA = 40c

CER's equity stake in Super was only A$620m equity as at 31 Dec 08. (pg 42 presentation)

The A$1.1b writedown in US assets would probably dissolve all equity remaining in Super for CER.

Remember CER can only lose what they put into Super. Therefore. they will not report negative assets in Super.

Even if there are further writedowns in Super, this should have zero impact on CER.

Super's future is secured until Dec 2010. As reiterated before, its ICR covenants that are more important for Super and other US assets, not LVR.

I estimate that NTA will be around 40c mark

I reckon thats just about it in terms of writedowns. It has been aggressively writing down its properties since Dec2007, well before most other REITs began writing down its assets.

It may be a long road ahead but I have no doubt theres more light at the end of the tunnel now than ever for CER.

As always please DYOR

Cheers