is under Algo Engine buy conditions and we see buying interest building above the $4.20 support level.
1Q22 Update and Reconfirming Guidance:
FY22 estimated FFO per security forecast in the range of 34.6 to 35.6 cents. Distribution per security is forecast to be within our target payout ratio of 75% to 85% of FFO.
Current market conditions remain uncertain and challenging with ongoing lockdowns and community transmission of COVID-19. All forward looking statements including FY22 earnings guidance are provided on the basis that the vaccination roll out continues and COVID-19 restrictions ease towards the end of CY21 and are underpinned by the following business assumptions: • Residential settlement around 6,400 lots • Residential operating profit margin ~18% • Land Lease communities delivering ~300 sites in FY22 • Retail rent collection returning to levels experienced prior to recent lockdowns towards the end of CY21
has switched to Algo Engine buy conditions and has now been added to our ASX 100 model portfolio.
Stockland, has formed a joint venture partnership with JP Morgan Asset Management to acquire a portfolio of industrial properties that they will expand over the next three years. The focus will be the faster growth opportunities within logistics and fulfillment centers.
A number of REITs announced their 3Q19 operational updates yesterday.
Dexus forecast 5% underlying earnings growth. reaffirmed its FY19 guidance for 5% growth.
Mirvac indicated their FY19 guidance will be in the 3 – 4% growth range with DPS growth at 5%.
Across the sector it is likely residential and retail remain the weak spots, whilst office and industrial will continue to provide strong growth. Softening of the retail sector was evident in GPT’s March quarter business update.
Despite GPT’s exposure to retail, the office exposure along with the groups strategy to expand the footprint in logistics, makes the stock one of our preferred opportunities within the REIT sector.
As the US yield curve flattens, which is caused by the long-end of the curve no longer increasing at the same rate as the shorter-end, we’ve started to see institutional money flow back into ASX listed yield sensitive names.
Our preference among these, within the property sector is GPT, SGP, and WFD, (based on valuation grounds).
Within Utilities and Infrastructure, we continue to like AGL, SYD and TCL.
After the strong rally in SGP, LLC, GPT and MGR, the price action looks to be rolling over, pointing lower, and we’ll watch these names closely. SGP appears to be showing the most selling pressure with the current price action taking out the 4.74 low formed on the 26th of April.
Our Algo Engine generated a buy signal on MVA.AXW (Vaneck Vectors Australian Property ETF) back in November at around $18.40, the ETF traded up to $21.30 and in the last week it’s starting to run into selling pressure.
The sell-off in property trusts and infrastructure names has been substantial, 15 to 20% since early September.
The REIT sector has underperformed as bond yields have rallied. The repricing has seen the dividend yield of REIT’s back above 5%.
Historically, the correlation between Australian yield names and US 10-year yields has been inverse; as US yields fall, Australian property trusts and infrastructure stocks rise.
US 10-year bond yields have risen by 79 basis points, or over 50%, since early October. We see this pace as unsustainable and expect the local yield names to trade higher as the US Treasury yields drift lower.
We continue to track WFD, GPT, SGP, SYD and TCL versus the US10 year bond yields.