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Bell Potter is getting back into REITs. |
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After steering clear of the sector for several years, the stockbroker has picked up ex-Jarden VP and respected real estate analyst Andy MacFarlane, whose first report landed in inboxes last week. |
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MacFarlane has had his feet under the desk for a few months, but initiations take time, especially when you’re starting from scratch. |
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One of MacFarlane’s key themes to watch in REITs is sector consolidation/M&A – something that naturally piqued Street Talk’s interest. |
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“Supportive valuation metrics could see corporate activity pick up for good businesses at discounted pricing,” he said. “REITs are currently trading at a circa 30 per cent discount to NTA, below the five-year average of just under 10 per cent discount.” |
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He continued: “... we believe there will be take-private interest for strategic asset classes/growth sub-sectors that are harder to gain scale within.” |
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MacFarlane avoided discussing which sub-sectors are ripe for consolidation, but we reckon we’ve got a pretty good idea of what’s on watch lists at the right price. Alternatives like data centres are hot property. While they don’t represent a big part of the market, they’re growing and backed by long-term thematic. |
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On the funding side, MacFarlane doesn’t expect to see wholesale discounted equity raises, saying most balance sheets are in decent shape. |
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REITs are a challenged segment of the market (particularly office) but BP has issued five “buy” ratings for those willing to bet we’re close to the bottom: HMC Capital, HealthCo Healthcare & Wellness REIT, Centuria Capital Group, GDI Property Group and Dexus Convenience Retail. On its sell list: Dexus Industrial REIT. |
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| Emma Rapaport Co-editor, Street Talk |
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Investment banks are feasting on block trades as IPOs remain in limbo, Aaron Weinman writes.The price of Trafigura Group shares rose 188 per cent in its financial year to September, the latest sign of how commodity trading houses are reaping huge profits, Bloomberg reports.EY executives have clashed over whether age should be a factor in appointing a new global leader, The Financial Times reports. |
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Brazilian Rare Earths, which has plans to list on the ASX next month, operates in the Bahia province in Brazil, where it holds exploration permits covering 141,000 hectares known as the Rocha da Rocha project. |
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