Ann: Centro - FY10 Results Announcement , page-5

unicornmilk,

The 33 cent NTA is for CER (Centro Retail). The announcements out today for CNP (Centro Properties)set out a negative NTA of $3.12. So if you are basing your investment decision on this one measure then I suggest you sell out now. BTW a simple read of the announcements would save you making a silly error in your investment analysis. The media is the last place to look for an indepth view of any company analysis.

The thing of note is that the NTA is a function not just of debt but also of independent property market value. This is the key aspect in the Centro equation. Refer to the Balance Sheet Waterfall analysis for a simplistic view on page 12 of the Investor Presentation.

The encouraging sign I take out from todays announcement is that cash flow looks stable and investment property revaluations have fallen at a slower rate. This is affirmed in other REIT's recent announcements. I am no US commercial property expert but would suggest that this may look like the bottom of the cycle. F11 may see some write ups in the portfolio in the second half, fingers crossed.

Pressure on the economic fundamentals in the USA and the fact that CNP is heavily exposed to this makes this a challenging play.

Two seperate class actions and ASIC action against the directors represent a headwind for major players to get back in. Not to mention the Hybrid Securities the lenders hold devaluing the business by 90%

There is also a whopping A$9.8bn of Debt to mature by Dec 2011, not to mention a major restructure, which may or may not be value destructing.

The 52cents that shows up on the chart that you are referring to was an intraday high and a classic pump and dump. This really was not a result of any substantial change in the business.

Centro's complexities in structure has been it's saviour, as well as its continuing ability to meet debt servicing requirements. If I was a member of the banking syndicate why would I want to convert the hybrid shares on a business that has a negative NTA of $3.12 and bring this onto your balance sheet. Rather, if the business is holding up, refinance the loans at a wider interest rate margin and force a breakup of the company into many bits as this will offer more value.

The key question as I see it is would the banks make more from Centro as a customer on wide interest rate margins or as a creditor liquidating the business. From the numbers I see today I would vote for the former.

I will be hanging on for the wild ride and see where it goes.

Obviously read the announcements and DYOR.