Yes. It's hard to dispute that the current SP of REU (and the other Rubicon listed entities) has been particularly hammered due to links with Allco.
However, they are also carrying reasonably high gearing - REU at 60% is on the low side for Rubicon!! This would be the other factor that has hurt REU.
IMO REU has been very harshly treated. What I do like is that at an operating level is is cash flow positive. I also like the fact that it is trading at around 20% of NTA backing. Put it this way: if their asset values fell by 30% then the SP would be still be trading below NTA (albeit marginally so).
However, would this impact the businesses cash flow? Looking at their previous reports they have some fairly solid tenants in some of their properties, and an healthy average lease term. I won't try to re-guess them now, but refer the annual report time in 2007.
IMO it will be very hard to lose on this one if you have a 2 or 3 year outlook, but relatively easy to make 100% plus return.
MJS
REU Price at posting:
0.0¢ Sentiment: LT Buy Disclosure: Held
