Centuria Industrial REIT

ASX:CIP

Centuria Industrial REIT

ASX:CIP
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Forum Topics CIP CIP Centuria Industrial REIT General Discussion
PeregrineCapital
Added 3 years ago

In Response to Chagsys straw about GMG and CIP.

GMG and CIP are very different propositions. GMG is a global developer & manager of industrial assets who also hold a minor stake in the assets they manage/develop. They are a fund manager.

CIP is a fund focusing soley on investing in industrial properties in Australia. Whilst the WACR is very slim it is still at a decent spread compared to Goverment bonds when compared with other industrial assets globally. 

Rising interest rates are definenlty a concern and would undoubtadely impact the WACR for CIP's portfolio if they rose a material amount. GMG would be impacted even more severely as they have operating leverage as well as exposure to the assets themselves. GMG gets paid to manage and develop these assets and decreasing valautions would really hamper earnings due to lower development and management income.

That being said I think the rents produced by industrial assets have a long way to run and will offset rising rates. My reasoning is as follows:

The economic utility to a consumer provided by in person shopping/consumption versus online shopping and consumption is narrowing at a fast rate. Whilst in person consumption will always command some sort of premium, the gap in rents produced by industrial assets compared to retail assets does not reflect the gap in consumer utility offered to consumers by the two assets in my opinion.

Going forward when a retailer is faced with the decision of how to split their leased space between retail (think shopping centre) and warehouse, they are going to be downsizing their retail footprint which costs them $1,000 psqm and upsizing their warehouse and online footprint which might have an all in cost of $200 psqm. Supply and demand will mean that industrial rents rise much faster than inflation whilst retail rents go nowhere, if not down.

 

 

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mmff
Added 4 years ago

Thanks Bear77, I will look into both of these....I appreciate all your posts especially that you make them easy to understand...Happy Investing

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mmff
Added 4 years ago

CIP is already behind the 8 ball on this one....APE (Eager Automotive Limited) only finalised the sale of these 3 x properties on 30/6/20 to Anchorage Capital Partners, a Sydney based private equity firm for $75M....not even 6 months later they are on selling for $171.1M....COVID has put some prices upwish I could buy in on "Anchorage"

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Bear77
Added 4 years ago

Yes mmff - PE (Private Equity) generally DO know how to make money in reasonably short time periods. If you want to gain some exposure to similar setups to Anchorage Capital - WMA (WAM Alternative Assets) do own shares in some PE mobs, as detailed on the third page of this October report: https://wilsonassetmanagement.com.au/wp-content/uploads/2020/11/4.-October-2020_NTA_WMA.pdf Roughly one quarter (24.8%) of WMA's assets are in Private Equity groups. WMA used to be called the Blue Sky Alternatives Access Fund, before the management transition to WAM Funds. And WMA shares are still available at a double digit discount to their last reported NTA or NAV, so you're paying less than 90 cents for each $1 worth of assets they hold, including their cash. Cash was 23.8% of the fund ($48.5m of the $203.7m total fund value) at 31-October-2020. $50.5m of the fund is invested in Private Equity. Another company that is based in New Zealand, listed in Australia (ASX:IFT) and operates exactly like a Private Equity group is Infratil. Infratil is managed by HRL Morrison and Co. For a great example of what they do and how they do it, see here: https://hrlmorrison.com/portfolio/z-energy/ [I hold IFT shares, and recently held BAF/WMA shares. I actually sold the WMA shares to buy the IFT shares.]

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