UBS reduces valuation by -8%. The broker has reviewed income on an asset by asset basis and finds there is no sign of a broad-based improvement outside of mining-exposed assets, Dick Smith vacancies and the recycling into higher quality assets.
The business is now re-set to the domestic portfolio. Credit Suisse notes a gradual decline in occupancy and same store operating income growth. Growth through acquisitions is expected to become tougher, given cap rate compression.
With the A-REIT sector down around 10% over the last two weeks, the broker thinks stock are now looking a little more attractive. Valuations have continued to improve for the most part and the near-term risk capital risks are diminishing. Debt is also cheap, meaning accretive acquisitions are still possible for many.