article in the australian.., page-6

Accepting anything less than or at NTA is not an option.

Few points we need to take into account:

- Even if yields/cap rates are constant at 7.5% for this HY, the properties should appreciate by the expected increase in rental income for the HY (4.4%/2 = 2.2%). $1.6b (value of CER properties 31 Dec 10) x 2.2% = $35m or 1.5c increase in NTA

- CER's properties are yielding at a substantial discount to some of its Aust peers such as WRT and CFX. WRT just reported in their quarterly that the weighted avg yield on Aust properties is 6%. CER's properties are still at 7.5%! Given going concern risk is a non-issue (auditor's comments in annual report should confirm this) and CER's rental growth is just as strong as its peers, cap rates should tighten quite a bit.

A yield/cap rate of 7% (still quite undervalued) would see the Aust portfolio increase by approx $100M or 4.3c NTA.

- Also one needs to take into account how much NOI will increase post the death of CNP. CNP will no longer be extracting elaborate management fees from CER so there will be quite significant savings that CER will realise. An increase in NOI as a result of management fee savings will increase underlying profit, the valuation of Aust properties (as NOI is a component in calculating the valuation of properties) and therefore NTA.

- Synergies as a result of a merger with the syndicates (I've discussed the benefits in a previous thread)

It has been a great journey so far but there is still plenty more bite in CER.

Let the good times roll

Cheers