crf sp, page-14

I think Gimmiboy has the correct rationale although I wouldn't apply exactly 5.29 to the current CER share price. I would assume a higher multiple based on the following facts:

1. CRF will be a top 60 ASX company. With this comes institutional investment, which CER did not have. CRF is therefore a far superior investment product, which should reduce the discount to NTA.

2. CRF is internally managed and has the added value of a services business, which many of the other REITs don't have. There is more scope for growth when compared to a vanilla WRT or CFX. In an environment of low growth and returns, smart money will be chasing better returns, which I believe CRF will be in a better position to provide.

3. As strange as it may sound CRF has similar income streams and potential to the once (long long time ago) CNP. In its better days, CNP was returning 49%p.a. on equity and had the highest compounding return of any REIT over a 10 year period. Yes we know it all went wrong with the US expansion but prior to this anyone who sold CNP shares made a lot of money. CRF has the potential to scale great heights if managed correctly.

4. The class action will always be a cloud over the new company, but how I see it, CRF is only liable for the CER portion of the claim. A company the size of CRF would find it much easier to absorb any claims arising, as opposed to CER facing it alone. This is a favourable outcome that should further reduce the discount to NTA.

5. WE ARE NO LONGER THE DOWN-TRODDEN. All of a sudden we will be the second largest owner/manager of retail property in the country. With that comes long lost respect, which should also be favourable for the share price.

In summary, I would expect an initial discount to NAV of 25%, which equates to a share price of $2.00.

Let's se what the markets think come December 14th...