Winston's Weekly: Updates on A-REIT results and recent economic data releases





The following transcript was AI-generated.

Paul Sanger: Good morning and welcome to this week's edition of Winston's weekly, covering all Things property. I am Paul Sanger, your host for today. And as always, we're talking today with Winston Summut, an investment manager at Euree Asset Management. Winston, welcome back.

Winston Sammut: Thank you.

Paul Sanger: Now, Winston, let's start with an update on this week's property News. There have been a few results this week in the sector. How are the results look so far and who reported?

Winston Sammut: The results have been fairly, fairly good. There's been no surprise. There's no real negative aspect in terms of the results. The big result that came out was the Goodman Group results. I can talk about that a little bit later, But all the other results: Charter Hall Education, sorry, it's now called Charter Hall Social Infrastructure, it came out and they've been well received. The trend, though, is that valuations right across the sectors have fallen. So that is a trend that was expected. I guess the extent of those falls vary depending on which asset class you're in. And it's fair to say that the expectations are that there'll be some more downward valuations over the course of probably the next 3 to 6 months.

Paul Sanger: Okay. That's something that investors should keep a real close eye on?

Winston Sammut: Yes.

Paul Sanger: Let's talk a bit more about the the Goodman Group. They reported a very strong result this week. What drove this outcome for Goodman?

Winston Sammut: Goodman is actually very, very well placed. Greg Goodman has positioned Goodman, and the board, in a very good position. They have very low gearing. They're well prepared to take advantage of any downside that occurs, through the downside. They are being fairly conservative, but I think the bit of news that was very pleasing for investors is their progress in terms of developing data centers. They've got about $12 billion of work in progress. 37% of that is really related to data centers. And this is a global phenomenon - they are very well positioned, they've got a land bank that is appropriate for development of data centers, and the market's taken to that very positively.

Paul Sanger: That's great to hear. Now, this week, we look at the data points. We've had CPI out early this week. It's been a surprise there. Unemployment numbers here in Australia, retail sales overnight in the US. What's been going on in the REIT environment globally and more importantly here in Australia?

Winston Sammut: Well, the CPI numbers that that came out in the US last Friday night, our time, were a little bit disappointing in terms of market expectations. In that, in inflation rose, not by a hell of a lot, but expectations were that the trend would see them fall a little bit. So that shook the markets. Both the Dow and the S&P that were at record highs came off quite a bit and that spilled into our market on Monday, with the market the REIT market being down as a result because bond rates went up in the US. But then a couple of days later here in Australia, we had the release of the unemployment numbers which showed an increase in the unemployment rate to about 4%. Now this is important because it's one of those data points that the Reserve Bank is focusing on in terms of determining whether they should raise rates or cut rates effectively.

And because the unemployment rate has actually gone up and the market's taken it as being positive, in that it's unlikely that the RBA will raise rates from these levels. So it's more to do with when will they start cutting rates, even though expectations are that that's being pushed down the calendar - being pushed out.

Paul Sanger: And fair to say that's going to be debated week in, week out, for the for the foreseeable future. But, you know, more data points are obviously going to give us more clarity on when to expect that - I hear you loud and clear! Now, we always like a bit of speculation Winston, and there's been considerable speculation that Andrew Roberts and Tim Gurner are in talks to merge their property construction businesses. What are your thoughts on this?

Winston Sammut: Okay. You have to remember that both Andrew Roberts and Tim Gurner are in the private space. They're not in the listed space, so they're not making any comments about that, but it probably is a good fit. Andrew Roberts is a remnant of the multiplex group, where he made his fortune, so he's more into commercial type developments with some residential, whereas Tim Gurner is more in the high end residential sector. The merging of the two groups would I think would make a $15 billion entity, which is, you know, reasonably large. And it sort of, given what's happened in the sector overall, the merging of those two different sectors and businesses would probably be a positive.

Paul Sanger: Okay. We'll continue to watch any further developments on that story. And then to finish up for everyone today: Charter Hall Retail REIT and Centuria Office, I think are scheduled a report today. Any insights? What do you expect to see from these two property players?

Winston Sammut: Well Charter Hall Retail has already come out with this announcement this morning, 9:00. Again, no surprises. I guess one of the positive things is that releasing spreads are holding up, tenancies are holding up as well. So it's all positive from that end. I haven't seen the the Centuria office at this stage. I expect that to be somewhat at a difficult because their assets are at the lower end of the quality market. They're not in the premium and A-grade type buildings and that's where the danger is really lies at the moment because people are moving out of those into better suited office space. They do have a bit of vacancies around. So the thing to focus on is to see how those vacancy levels are actually stacking up.

Paul Sanger: Great insights Winston. We also see how the stock open in about 45 minutes. As always, absolutely pleasure to have you on today getting those insights. And we'll be back next week with another of Winston's weekly. Thanks, everyone, for tuning in.

Winston Sammut: Thank you.

Disclaimer: Sequoia Financial Group (ASX:SEQ), the parent company of Finance News Network, owns a 20 per cent interest in Euree Asset Management.


Name Paul Sanger