A few points in reply: - Post the Canberra acquisition, ECF's total assets are $378m which means the Perth Workzone asset now represents around a third of the portfolio. - The Workzone rental premium versus the market was similar at the time the property was rented which implies the location and asset quality are well above market average as highlighted in the PDS. I'm not sure it is prudent to assume a return to market average in just under 6 years is likely without digging deeper. As with equities, commercial property rentals vary considerably depending on a number of key factors. - The NTA was $1.18 at the time of listing but will be higher now post the Canberra acquisition. My estimate suggests $1.25+. In addition, when comparing ECF's assets passing yields versus recent market transactions ECF's NTA appears conservative. - The AREIT sector trades mainly on yield and is currently trading at a 30% premium to NTA on average. A 30% premium to a $1.25 NTA for ECF is $1.63 but at this level ECF would still offer a 6.5% tax advantaged yield, more than 50% higher than the AREIT sector average. Maybe it deserves to trade at a higher yield than the sector average for the reasons you mention but I think the fair yield premium will be well below 50% which implies fair values well above $1.63. - I still think $2 is in the right ballpark as a 12 month target price in a yield scarce world.
ECF Price at posting:
$1.33 Sentiment: Buy Disclosure: Held
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