Thoughts on some property stocks please

Hi Glenn,

We like Dexus (DXS) as a deep value contrarian opportunity largely exposed to A-Grade office. We are wrong on this so far, however we believe the return to office thematic is gaining momentum. Low new supply will have positive ramifications for rents and assets values in the years ahead. The same applies for SGP, although they are not screening as ‘cheap’ as DXS.

Regarding Cedar Woods (CWP), the stock is now back trading broadly in line with NTA (based on book value not market value), and we think they provide a good exposure to an improving residential housing market at a value less than replacement cost. They have low liquidity, and are generally tightly held, and while this is not one for us, we can see why it’s appealing.

No specific news on CWP this week, however we suspect liquidity, or lack there off, has helped it, with the sell-off being more macro driven which generally means larger cap index constituents will be used to reduce market exposure, rather than lower beta, illiquid names like CWP.

In terms of ResMed (RMD) we believe its prudent to hold after recent weakness but we aren’t considering increasing the position given the uncertainties that remain.  The stock has moved on ‘what if’ scenarios, which are hard to quantify, but it’s as cheap as it’s ever been (in terms of multiples) and for those that can stomach some risk, this may prove a great opportunity, but only time will tell.

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Dexus Group (DXS)

LAST UPDATED 22/09/2023 15:45

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Dexus Group (DXS)

LAST UPDATED 22/09/2023 15:45