Dexus is Australia’s largest office landlord and as you can imagine suffered heavily at the hands of COVID, and to date their recovery has not been as swift as many of the other stocks in the sector. Uncertainty around what the new normal looks like in terms of demand for office space is clearly on the markets mind however this uncertainty in MM’s view is very much in the price.
Ultimately, MM believes that office demand will taper but not by the magnitude that many think and there is a natural offset through growth in employment. For most businesses, the office will remain the primary place of work, of course with more flexibility around the edges.
DXS is trading at a 12% discount to the value of its underlying assets versus an average 8% premium. Couple this with a 5.5% projected yield over the coming 12 months and it’s easy to see why we added it to the MM income portfolio last month.
MM remains bullish DXS initially targeting $11
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