At $0.15 the market seems to have tared IIF with the Centro...

At $0.15 the market seems to have tared IIF with the Centro brush.

The only real dirt I can find is that in 2011, 65% of its loans are due to mature in a single year. The financial crisis should be over by then so re-financing in time shouldn’t be an issue.

The fundamentals are strong and it’s worth $1.50 (imo) based on fundamental analysis (Discounted Cash Flow) and even that is below its 2008 NAB per share of $2.09.

Who knows what the price will do in the short term, but long term this plays a winner.

I accept that there’s a risk of some forced asset sales if IIF breaches lending covenants but that does not justify $0.15 or even a price less than $1.00.

Someone please challenge me on this and give me a rational reason why so much risk is priced into this stock.


Fundamentals

1) 98% occupancy rate with quality tenants.

2) Average lease term 5.1 years.

3) 95% of revenue comes from straight forward property rental.

4) Industrial real estate values in Australia and Canada may have softened but not collapsed (nor will they imo).

5) 55% loan to value ratio is reasonable (market leaders usually 50%, Centro 70%+).

6) Has successfully negotiated with lenders to increase to its permitted loan to value ration from 55% to 60% (till Dec 09) and 57.5% (till June 2010.)

7) Only 10% of its loans mature in 2009 and 2010.

8) Sensible capital management strategy to sell its European portfolio (approx 12% of total portfolio), noncore assets and reduced the dividend payout.