one must consider the perth asset(approx 50% of the assets at time of PDS) is over rented(thats the rent above market)by 79%. nearly double the market rent according to the PDS. The remaining lease term on this asset is around 5.5 years, so expect the yield to drop significantly in 5.5 years.
Perth net market rents will only increase 5% or so per year, so thats about a 40% reduction in yield from their largest asset.
Similarly their largest Canberra purchase seems questionable, overrented by 20% and reliant on single government tenant. Expect rents to drop here also in 4 years upon lease expiry.
I think $2.00 is unrealistic. Also one must consider the net assets is only $379m compared to average A-REIT of over $1-2Bn. It is also geographically weighted to perth,brisbane and canberra with no sydney and melbourne where all the national real estate price growth is occurring. Significant discounts must be applied for these basic facts.
Re ENN management being the best in sector, - ERF was floated by them 3 years ago and so far is well below IPO after 3 years of trading.
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