CENTRO'S future is still up in the air and along with Rubicon Europe Trust, has joined Macquarie CountryWide as the least preferred stocks in the A-REIT sector.
And investment bank and analyst Merrill Lynch has reiterated
ML said despite Centro’s future is still up in the air and its fate is in the hands of its lenders. Centro has $4.2 billion of debt maturing as early as April 30 and may have an additional $1.7 billion liability related to guarantees at Super LLC, among other potential contingent liabilities and commitments.
“Centro’s near term funding risk is well in excess of potential equity source from its anticipated sales of CAWF & CAF ($1.2 billion), with the great unknown being the price and size of an equity infusion from a yet unidentified white knight,”
ML maintained its 26 cents NAV for the group.
ML has also classified Rubicon Europe as its least preferred stock, in light of potential re-financing risks and liquidity issues.
The investment bank said the asset sales in the current volatile market is risky, and shareholders are required to have REU manage capital rather than return it.
“Shares of REU have declined 81.6% YTD. However we think downside risks remain, with a capital call from REU’s debt provider, Credit Suisse. REU is now at the mercy of its lenders, and with the likelihood of it being a forced seller in a challenging European property environment.
“Management credibility is highly questionable, in our view… Unfortunately, we can no longer count out additional missteps,”
Meanwhile, on the other end of the spectrum ML has listed Stockland, Westfield, Goodman Group, CFS Retail, DB RREEF Trust and Lend Lease on the most preferred stocks.
ML said
ML has priced Stockland’s 12 month at $8.40 and it said the risks are a protracted downturn in the residential markets, cost over-runs on developments and worse than-expected downtime on key lease expiries.
ML has set a $5.25 price objective for Goodman. The risks are execution risk in competitive markets, a slowdown in global demand, and political risk affecting GMG’s expansion.
Australian Property Journal