Case study of failed reit

[KopiKat]

Hmm.. you must be assuming that at the PBT level, it'd be zero anyway and it doesn't matter whether they'd be taxed or not. Not a tax expert either but I think Debt repayment wouldn't qualify as an Expense and is likely still taxable.

I was also looking thro' your other A-REIT presentations (for Dec-12) link (Lazy to check latest ones for Jun-13), At the NPI level, what you said is true ie. enough to pay for any 1 year of debts due (none more than $400Mil). But, looking at 'Amount Available for Distribution' (pg9), it's not true ($281.7m for FY11/12). Further, if they do have to pay tax (plus assuming what I think is true that Debt Repayment is not considered a tax deductible expense), the amount available will be lower. So, not exactly enough... but yes, it'd still be better than many other REITs...

Notice that interest expense and other borrowing costs are deducted from income before tax is applied (pg 6) but again am no tax expert.

If we annualise 3Q FY12/13 distributable income, it's about $320 mil. Still not 400 but should adequately cover most years of refinancing except 2.

It goes back to my original question of whether this $320m will be taxed at the Corporate Tax rate of (17% ?). If yes, then there'll be larger amount of shortfalls. Not perfect, but still better than most, I guess.