I am learning how to analyse REITs as a possible long-term low risk investment.
Dexus Convenience REIT (DXC) owns "high quality Australian service stations and convenience retail assets.". One could argue it is going to take many years before service stations become obsolete (if they ever do) due to lack of action from our elected officials on transitioning to EV.
Current share price: $3
Current NTA: $4.03
WALE: 10.8 yrs
Occupancy: 99.7%
FFO and distribution: 23.1c
Price to FFO: 13
Distribution Yield: 7.7%
Discount to Current NTA: ~25%
Forecast FFO FY23: 21-22c
I might prefer industrial REITs than 'convenience' REITS because of LT thematics, but DXC would look enticing at a share price less than $2.80 based off Price to FFO, Yield, and historical valuation levels. Nice discount to NTA but this might be usual for these types of REITs or REITs in general.
Other things to take into consideration:
- Company is doing a share buy-back so management have to believe the company is undervalued
- They have made some acquisitions and disposals during the year.
- Upgraded guidance during the year.
