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from legg mason's nov report

  1. 84 Posts.
    from legg mason's november report, more info from

    http://www.leggmason.com.au/en/pdf/monthly_reports/
    LMPST_monthly.pdf

    Profile
    OVERWEIGHT POSITIONS ACTIVE %
    Valad Property Group +4.8
    Macquarie Office Trust +4.0
    Macquarie CountryWide Trust +3.5
    Macquarie Infrastructure Group +3.0
    Dexus Property Group +2.7

    The Macquarie satellites largely underperformed this month, as did
    other geared A-REITs, as investors became a little more risk averse.
    A number of these entities have added significant relative value to
    the portfolio since March of this year and a little unwinding of
    these gains at some stage was always on the cards. Encouragingly,
    there was little negative news flow of note from these entities
    during the month and we continue to see significant value in the
    underlying property exposures of Macquarie CountryWide
    (supermarkets and shopping centres in Australia, New Zealand and
    the U.S.), Macquarie Office (high grade office buildings in Australia,
    the U.S., Europe and Japan) and Macquarie Infrastructure (toll
    roads in Australian and globally).


    Valad Property Group is another leveraged A-REIT that has added
    significant value over the past nine months but gave back some
    ground this month. Again, there was no negative news during the
    month. Indeed, the companys AGM was relatively upbeat as the
    firm confirmed its strategy to improve earnings through growing
    revenue and reducing debt importantly, the recent capital raising
    has given the firm the time and means to pursue this goal.


    Outlook

    Despite lacking some direction over the past two months, we
    continue to believe that the significant structural improvements
    that A-REITs have implemented post the global financial crisis have
    positioned the sector very favourably going forward, particularly
    against global REIT peers.
    A-REITs have reduced debt significantly and refocused on
    traditional rental streams. As a result, A-REITs are poised to produce
    strong margin expansion once revenue growth returns. While
    shorter term vacancy issues and higher interest costs remain hurdles
    to negotiate, the lack of new supply should support the sector in
    the medium term.

    As a measure of future expected relative outperformance, we
    remain buoyed by the high level of dispersion in our portfolios
    expected return relative to the wider A-REIT market. At present we
    observe around four times higher than normal return to fair value
    between our fund and the market. Opportunity at the stock level
    remains high. This should produce above normal portfolio returns
    and leads us to be very optimistic about the portfolios medium
    term return prospects.
 
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