# CQO - Charter Hall Office REIT



## roland (16 April 2010)

Formally MOF Macquarie Office Trust, CQO had a good day today. Around 40 million in volume for the last 2 days has us on the high side of volume.

REIT's are known to lag the market and it seems they are strengthening. I hold CQO, ABP and FKP and have noticed they are all picking up.


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## nulla nulla (17 April 2010)

A surge in buying on Thursday lifted the trading price for CQT out of the grid lock at $0.285 - $0.29 to close at $0.295. This was a welcome change for a share that has traded nowhere in recent months, despite having a good underlying yield.
On Friday, at roughly mid day, 15 million shares cross traded at $0.2925. This was followed by a surge through $0.295 taking out roughly 9 million in the sellers column of the market depth just before close. In the closing auction it looked like there would be enough buyers to take out the 4 million shares for sale at $0.30, with a possibility of lifting the closing price to $0.305. However, with only minutes to go before the auction closed, another 4 million shares came into the sell column at $0.30 locking the closing price in at $0.30
Hopefully the recent interest in REIT's can continue next week with further support for CQO and the share price can move upward closer to the Net Tangible Asset value (NTA) of $0.44 per share.


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## nawshus (17 April 2010)

nice commentating there Nulla. I've been holding CQO for 5mths now, and waiting for it to shine, so hope you're right man.


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## Looingforvalue (17 April 2010)

The AREITs have had a number of false starts in the last year. Analysts generally have continued to take a cautious to negative view on the sector, still concerned about debt rollovers, no rental growth, and lack of property value increases.

See FKP's Peter Brown interview on Business Spectator. He  hinted the trend is changing - banks are looking to lend (they have offered to project finance FKP's Aerial project in Melbourne!).  Property values have bottomed and may in fact be heading up, even if modestly initially, looking at the interest from offshore buyers, and the fact that property trusts like Mirvac and GPT Wholesale are raising money to BUY properties, before the cycle takes off.

So I think, stocks like CQO and FKP that trade at 60% their written down NTA, can't stay that way forever, if the cycle is turning.

Of course, the broking analysts will tell you to BUY them ONLY after the whole property sector has had a big run, and optimism is everywhere. Its so typical.

This is just my opinion. I could be wrong, but really, so many sectors have had big runs. The one neglected sector is the AREITs. 

All they have done so far, is recover from fear-driven selling during the GFC, and selling to raise liquidity as unlisted trusts ceased to allow redemptions. The trusts, to me, are yet to reflect the medium upside in the property market, provided, of course, the global economy continues to improve.

Before the GFC, most were trading at significant premiums to their NTA, reflecting optimism that property values would continue to rise. Will we get back to that at some point?

The mums and dads who used to buy and hold property trusts for their yield and because properties, as an asset class, were deemed to be safe, may not be back this time, robbing the sector of one key support.

So may premium to NTA is a long shot, but closing the discount to NTA surely is highly possible.

OR am I whistling in the wind?


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## nulla nulla (18 April 2010)

Looingforvalue said:


> The AREITs have had a number of false starts in the last year. Analysts generally have continued to take a cautious to negative view on the sector, still concerned about debt rollovers, no rental growth, and lack of property value increases.
> 
> See FKP's Peter Brown interview on Business Spectator. He  hinted the trend is changing - banks are looking to lend (they have offered to project finance FKP's Aerial project in Melbourne!).  Property values have bottomed and may in fact be heading up, even if modestly initially, looking at the interest from offshore buyers, and the fact that property trusts like Mirvac and GPT Wholesale are raising money to BUY properties, before the cycle takes off.
> 
> ...




Don't forget the involvement of the large hedge funds. It may be worth monitoring the Substantial share holdings and their movement. This area, more than the busking of analyists, could be a good indicator of when the investors are regaining confidence in this sector.


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## Looingforvalue (18 April 2010)

nulla nulla said:


> Don't forget the involvement of the large hedge funds. It may be worth monitoring the Substantial share holdings and their movement. This area, more than the busking of analyists, could be a good indicator of when the investors are regaining confidence in this sector.




Good point. These big players will kick off and get set before the broking community sees the light. In this regard, it's interesting to see Canadian pension funds injecting capital into Growth General in the US to save it from being taken over by Simon Properties on the cheap. 

Worth watching turnovers.


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## nulla nulla (19 April 2010)

Following the retrace of financials on the djia on Friday (their time) if the xao follows suite this morning, there could be a few re-entry oportunities. Mrs nulla has put her order in for $0.28 (which seems to be a good support level in recent months).


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## Looingforvalue (20 April 2010)

nulla nulla said:


> Following the retrace of financials on the djia on Friday (their time) if the xao follows suite this morning, there could be a few re-entry oportunities. Mrs nulla has put her order in for $0.28 (which seems to be a good support level in recent months).




Think FKP will move ahead of CQO. FKP is all Australia, and channeling its marginal resources into residential communities - where shortages and price rises are the talk everywhere. FKP is more a developer than a AREIT.

CQO has 49% of its NTA in the US. That market will take longer to improve. The other half, once the exit from Japan and Europe (comprising less than 5% of total valuation) is complete, is all Australia. That will move but slowed by the US drag.

Comfort is that Charter Hall paid 31cps for a big portion of Macquarie Bank's holding in the Trust (known previously of course as MOF), and has first right of refusal on the rest of Macquarie Bank's holding. Can't see the bank wanting to hold on to the shares for long. Think it is hoping to extract a better price than 31c.

So buying around 28-29c should pay off one day. Problem is the wait may be longer than most can tolerate.

Meanwhile, each day, the shares look very much trapped by day and arb traders, churning large quantities for the half cent turn, if they get it right. Well half a cent on a price like that is a good percentage for a day's work!

Need patience with this one.


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## nulla nulla (28 April 2010)

Looingforvalue said:


> Think FKP will move ahead of CQO. FKP is all Australia, and channeling its marginal resources into residential communities - where shortages and price rises are the talk everywhere. FKP is more a developer than a AREIT.
> 
> CQO has 49% of its NTA in the US. That market will take longer to improve. The other half, once the exit from Japan and Europe (comprising less than 5% of total valuation) is complete, is all Australia. That will move but slowed by the US drag.
> 
> ...




Not nit picking but I read somewhere that Charter Hall paid $0.305c per share for the initial Macquarie holding. I sold a parcel yesterday at $0.30 when I realised that there was very little buying going on at $0.305 and that the bulk of the higher than average turnover was going through at $0.30. 

I watched the sellers, sell down through the $0.30 buyers and sold just before it dropped back to $0.295/$0.30. The auction held $0.30 at close but there were hardly any buyers there after close at $0.30.

The djia dropped 213 points last night and I would not be surprised to see a sell down acroos the xao today (including cqo). I have two bids in to re-enter at $0.28 (and possibly $0.29). 

I agree that cqo is unlikely to test the most recent highs of $0.345 in the near future until the USA shows major signs of a turn arround. Not withstanding, if they maintain the current dividend levels it is worth getting into at low prices for the yield.


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## roland (31 August 2010)

Just for info...

Out of wanting further details on whether I needed to do anything with the consolidation, I called the investor at Charter Hall today.

Firstly, I must say that the girl that answered the phone was extremely polite and helpful - not only that, but very knowledgable 

I got the impression that Charter Hall are on the ball with getting CQO in a much better position. The NTA is $0.42, so we are trading well below that.

The exit from the Maguire joint venture and reduction in US exposure is expected to free up capital for further AU investment. Additionally the anticipated Japanese sales will further assist in freeing up capital for the same.

The 10 to 1 consolidation is anticipated by Charter Hall to pull it out of the "penny stocks" (my words) and make it more attractive to larger investors. The current 1 pip (4%) swings bring in the day traders and increases the volatility.

The Charter Hall rep said that we are in an anticipated trough and are well on track for a strong recovery.


Now, I am not easily sold to, but she was convincing - after the call I feel a lot more confident with CQO's future.


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## nulla nulla (16 January 2011)

In the last few months cqo appears to be gaining favour climbing to the low $3.00 area (pre-consolidation of $0.30's). Still has a long way to go to get near the NTA of $4.20(?) but the volumes of turnover don't match the pre-consolidation volumes.


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