the old cnp v cer discussion

Hi guys,

There has been much discussion about the merits of holding CNP or CER.

The higher LVR of CNP and the announcement in August that it may endure a debt for equity swap has made CER the more attractive stock to hold. CER's relatively high NTA and the greater likelyhood it will pay a dividend in the near term has given it some support, even from some courageous institutional buyers, during this brutal year.

However I wonder about things going forward. With reports in the media that General Growth Properties and other retail property holders remain on the brink of collapse, there is a danger that commercial property values will have to be marked down further, particularly if large portfolios are liquidated.

If Centro is given an extension and is not forced to sell excessive numbers of properties, I wonder if the Services Business will hold its value better than the properties themselves, therefore negatively impacting CER's balance sheet more than CNP's. CNP does not have to compete fiercely to hold onto management rights and perhaps this revenue will be more resistant to the slowing economy and the inevitable increase in property vacancies.

I have prepared a graph that shows the dramatic cross over in the share price of CNP and CER in recent weeks. I was hoping to attach it to this thread but I don't know how to URL it.

Anyway...

Perhaps CNP will continue to outperform CER in the medium to long term?

Of course this will depend on the details of the debt for equity proposal.

dc1