12-11-2014, 06:02 PM
Lacklustre is not the right description for Australian property mkt.
I think mgt repeated what I have been posting on the conditions several capital cities in Australia:
i) Sydney doom will continue as demand is very strong due to a decade of under-supply as a result of "screwed up" in development approvals under the Labour govt. Labour rule from 1995 - 2011 and Liberal (aka PAP) assuming state leadership from 2011. Bouyancy in NSW prop mkt is largely due to change in state government. Simply because that NSW property mkt went to sleep in a "lost" decade and the price reversion to mean does not imply a "Bubble" as deemed by many external watchers. Australia is a big continent and even within each capital cities, the dynamics and drivers of the local property mkt is different.
ii) Melbourne property mkt over-supply is concentrated with the high rise segment within the inner city -this is inline with most of my readings and postings. So if anyone decides to go with newbies that decide where over-supply is the in-thing, so be it.
iii) with Australand - FCL has acquired a proven software and a development cum industrial portfolio. This is probably where the goodwill is being paid for... maybe fair market value. In fact they did quote an example on a landsite in NSW that a chinese developer is willing to double the market value just for the raw land and the development approvals - hence there could be value to be unlocked over time as developments are being rolled out over time.
iv) unlocking value of ALZ's industrial properties is definitely on track. Question here lies if it is a ASX listing where demand and appreciation of the quality is better or via FCOMM where it has a first right of refusal. However, do note that FCOMM do not have logistic / industrial exposure even though it has Australian office exposure by virtue of its previous legacy from Allco, hence there remains the possibility of a Australand REIT.
Posting these meeting, I m more confident of FCL and their rationale of acquiring ALZ. They are not fools. They will come good.
Having said that, mkt's perception of FCL is not something that long (wrong) term investors can decide. If FCL keep delivering the goods, then it will be a market inefficiency that is presented to investors looking for value.
Vested
Core
GG
I think mgt repeated what I have been posting on the conditions several capital cities in Australia:
i) Sydney doom will continue as demand is very strong due to a decade of under-supply as a result of "screwed up" in development approvals under the Labour govt. Labour rule from 1995 - 2011 and Liberal (aka PAP) assuming state leadership from 2011. Bouyancy in NSW prop mkt is largely due to change in state government. Simply because that NSW property mkt went to sleep in a "lost" decade and the price reversion to mean does not imply a "Bubble" as deemed by many external watchers. Australia is a big continent and even within each capital cities, the dynamics and drivers of the local property mkt is different.
ii) Melbourne property mkt over-supply is concentrated with the high rise segment within the inner city -this is inline with most of my readings and postings. So if anyone decides to go with newbies that decide where over-supply is the in-thing, so be it.
iii) with Australand - FCL has acquired a proven software and a development cum industrial portfolio. This is probably where the goodwill is being paid for... maybe fair market value. In fact they did quote an example on a landsite in NSW that a chinese developer is willing to double the market value just for the raw land and the development approvals - hence there could be value to be unlocked over time as developments are being rolled out over time.
iv) unlocking value of ALZ's industrial properties is definitely on track. Question here lies if it is a ASX listing where demand and appreciation of the quality is better or via FCOMM where it has a first right of refusal. However, do note that FCOMM do not have logistic / industrial exposure even though it has Australian office exposure by virtue of its previous legacy from Allco, hence there remains the possibility of a Australand REIT.
Posting these meeting, I m more confident of FCL and their rationale of acquiring ALZ. They are not fools. They will come good.
Having said that, mkt's perception of FCL is not something that long (wrong) term investors can decide. If FCL keep delivering the goods, then it will be a market inefficiency that is presented to investors looking for value.
Vested
Core
GG
(12-11-2014, 04:19 PM)piggo Wrote: [ -> ]Just attended the EGM. So many retirees waiting for food as usual. Some minority noises trying to fight for more dividends and some asking what's a perpetual security.
Suspect Bob (Australand exec) was expecting more substantial questions but was pleasantly surprised by such an easy work day.
Anyway, a summary is that FCL is working hard to realize value in Australand investment portfolio (divestment to FCOT etc.) and should have something in the next 12 to 18 months. They are also expecting cap rate compression to continue in Australia. Also to counter the lacklustre Australian property market, they are bringing forward developments to make use of the current market condition..
The CFO was emphasizing on the good cash flow visibility, and how it's an earning accretive acquisition etc. But at the moment, they are in no hurry to reduce leverage (don't see why they should?). About the constant badgering on dividends, he assured that there will be a final dividend.