Ann: CMA proposed acquisition of an 8.76% stake in TOF, page-8

Hi WR,

In CMA's last results presentation (FY16) they note gearing of only 33.2% with debt expiries of 3.8 years (the next major expiry is Dec 2019). The debts are 59% hedged with an average hedge maturity of 3.7 years. Their average interest rate is 3.9%. I also note the were quoting excellent occupany rates in October.

So, it would seem the intrinsic risk is relatively low. However, there are a couple of factors which might have an impact on people's view:

1) Thinly traded - if you look at the depth now you will see very little there. The thinly traded nature of CMA could be causing higher volatility as it is harder to get in or out. This could be worrying for some as any future interest rate increases would require longer to reposition out of CMA?

2) A general increase in interest rates could reduce holding values of all commercial property.

Having noted these possible negatives, I would also note that CMA's NTA at 30 June was $2.18. Since then, the September quarter income has been earned and paid out but we should still have accrued 2 months of the December quarter income. So the 2.05 unit price is well below possible NTA (assuming the asset values are accurate)

As always you should DYOR as I may have missed something :-(

So perhaps a good investment but frustrating to watch the unit price!

Alf