Hi Ian, thanks for the kind words.
We like GMG because it is leveraging what it has into a new growth area, being data centres. Unlike NextDC (NXT), Goodman have a land bank and the capital partners to roll out large scale data centres developments. We met with the Portfolio Managers of WAM Leaders this week for a discussion on markets generally, and a number of stocks specifically. John Ayoub made a very good point, insofar as they have recently bought GMG as a lower risk play on AI, a picks and shovels sort of approach to a new cutting edge theme. AI is powered by data, and data sits in data centres. While GMG is clearly in property, there is so much more to it that we like, with an initial target of $27.
We can see your point around office, it’s a debatable point around what demand will look like from here, however, from everything we hear and experience, the WFH revolution is but a fraction of what it was hyped to be. That said, the weakness in office is more at the B & C grade level, not the prime A grade office, which is primarily where Dexus operate.
We read some quantitative research this week put out by UBS, who rated REITS for their exposure to interest rates. If rates have peaked they flagged the following five names as the biggest bang for buck on that thematic: CHC, CNI, VCX, HMC and GPT. Of these, we own CNI.
If/When bond yields actually start falling in a sustained way, they sighted BWP, CHC, NSR, GMG and ARF as scoring highly.
Of the property related stocks we own that have the lowest correlation to falling rates, they sighted LLC and DXS.
