whats the latest, page-2

I have today taken a small position in this stock. Fundamental to my decision is a personal view that:
(a) there's only so much you can lose when a share is priced at 1.4 cents;
(b) the market is warming to REIT's generally; and
(c) In many cases REIT's are where they are (in terms of depressed share prices) not because of anything they did or did not do but rather the circumstance (too often temporary) they operate within eg high interest costs or skittish financiers etc.

Of course some are exactly where they decided to be... the timing of CER's bold foray into US is worthy of some discussion.

I did some research and present it here as feedstock for feedback or criticism. Please do not rely on this as the data may be wrong or misinterpreted...peple must do their own research.

Values shown unless otherwise stated, USD

My take is as follows:
1. RAT (hideous code...) has two primary asset classes viz CRE (Commercial Real Estate Loans) and Government tenanted properties (primarily).

CREs
2. As at 31/12/08 RAT had approx $200M gross value of CRE's outstanding having sold circa $80m since 30/6/08.
3. Key CRE metrics are (based on crude rehashing of data ex presentations and assuming aside from sales, all else constant, values weighted averages, weighted according to valuations) :- approx cash yield ~ 10%; DSCR ~ 1.1 yrs (compared to historiical 0.83); average term ~ 6.22 years (compared to historical 5.44 years).
4. Residual debt attributed CRE's @ 31/12/08 circa $85M. Despite numerous agreements with financier (Credit Suissse), RAT failed to meet loan covenants and so as we speak in default and seemingly at the mercy of CS .
5. Of loans sold, average 20% discount to 30June 08 valuation realised.
6. 31 facilities are outstanding the larget $37M, average $6.5M. The top 5 represents circa $94M and so the balance average about $4M.


Property portfolio.
7. The portfolio post sales (pre recent $175M conditional contract announcement) represents 20 properties. GSA $525M; Non GSA $154M; Other $31.7M.
8. derived metrics weighted average lease term (again weighting on basis of value) ~ 5.28 years (historical 5.22 years); occupancy nigh 100%
9. For GSA properties, reported tenants are what I'd consider "roll over tenannts". Tenants incluude FBI and Homeland Security. These departments I think have a continuing relevance to good ol' US of A...lol
10. Debt ascribed to property portfolio is I think about $563M representing secured bank loans $ $294M; Unsecured loan facilities ~ $269M;
11. All facilities are the subject of some discussion but seemingly heading towards a stable position ie especially unsecured facilities ahve I understand agreed in principle to requisite documentation changes to accomodate RAt's circumstance
12. Property sales realised 6% discount relative to 30 June 08 valuations. This could be misleading as valuations would have been assembled in full knowledge of conditional contract prices as at 30/6/08...caution with this!!!

Other.
12. RAT's responsible entity with Rubicon Asset managment P/L which is under adminsitration (R&M) compliments of NAB and it's Allco exposure. Undoubtedly this has delivered RAT a reasonable quantum of issues;
13. RAT has some devlopment onbligations and I suspect is under some pressure to honour the construction committment. Equally, it will be under intense pressure appease current lenders especially what appears to be a hostile Credit Suisse. Thsis presents the critical question... does RAT have the cash flow to continue to operate whilst simulatneously operating it's business. I'm not sure what investemnt has been made in the Overtown development but as at 30 June RAT reported $17.7M
14. Rat's valuation has been indifferent to exchange rate volatility. Maybe the market's view is that 10-0% of nothing is not much. 30 June 08 accounts were assembled on basis of a circa 95cent (USD/AUD) rate...as I write, same rate 67 cents.
15. Best guess of net assets (after discount CRE by a further 30%) is AUD0.72/unit.. Please read "guess" as exactly that!!!

Catalyst for change:
(a) final conclusive resolution of CS debacle;
(b) continuing securitisation of CRE portfolio displacing property debt
(c) resolution of responsble entity given RAM is a but a temporary condition;
(d) change of management guard... I suspect existing managers will eb somewhat market beaten should they survive!!!

The above a basic thoughts being pushed around my desk. I welcome feedback, comments or ideas.

cheers!

Again, DYOR!!!!