CPA - Commonwealth Property Office Fund

[nulla nulla]

The resistance level of $0.915 was broken and then appears to have beome a support level. The invovlement of international hedge funds clamouring to gain footage in CQO and Valad appears to have generated interest in the reits trading at a discount to nta.

Some of the big ones like sgp and wdc took a haircut, but cpa, dxs, gpt and iof appear to be getting some long overdue attention and support.

Can it break through $0.95? As always DYOR.

 

[UMike]

Looks like it has broke through 95c today.

I got rid of mine @95c just in case.

 

[nulla nulla]

Looks like it has broke through 95c today.

I got rid of mine @95c just in case.

I admit that I have trouble working out what is going on with cpa, I had been expecting a retrace but it keeps pushing ahead while the rest of the market is dipping. The share price was previously trading in a broad range of $0.90 to $0.975. This was discounted to NTA, however the assets are Australian based therefore the income and valuations are not subjected to currency movements.

When cpa acquired the Melbourne assets, issuing shares at $0.86 to finance it, some parties took exception to the discount and bailed out pushing the share price lower. Personaly I consider this smacks of cutting your nose off to spite your face. Not withstanding, cpa dropped to $0.81 well below nta.

Surprisingly a lot of shorting then took place as if cpa could be pushed lower. The ASIC open shorts climbed over 42 million shares in this low range. Foolishly I allowed this to influence my decisions to acquire more cpa in the range $0.885 - $0.915. cpa has now climbed back into the mid $0.90's ($0.955) putting it back on par with the Australian based reit's (subject to discounted nta's).

Accordingly, I have revised my entry points upwards and expect cpa to trade between $0.905 and $0.975. Naturally I can expect to be proven wrong in the future. Particularly as cpa will go exdiv on or about 24/6/11. Also a lot of reits suffered as overseas funds were pulled out as the aud$ climbed. The rise in the aud$ was like a double bonus to overseas investors, rise in share price and rising $, time to take the profit. Volumes of turnover appear to have dropped accordingly since.

As always, do your own research and good luck. Nothing is easy, you have to work for it.

 

[UMike]

I couldn't work out why they went so low either.

I'm trying to write this tactfully as i do do my own research but I enjoy reading your thoughts on this and a couple of other shares. Even if you think you are talking to your self I am sure there are a few reading and nodding their heads.

Happy to get back into CPA and a couple of other REITs on the next dip.

 

[nulla nulla]

I couldn't work out why they went so low either.

I'm trying to write this tactfully as i do do my own research but I enjoy reading your thoughts on this and a couple of other shares. Even if you think you are talking to your self I am sure there are a few reading and nodding their heads.

Happy to get back into CPA and a couple of other REITs on the next dip.

Thank you for the feedback. For a while there I wondered if I was wasting time and space posting, then I realised from the number of "views" others were reading the thread. I take the lack of negative feed back as comfort that I am not entirely wasting my (and everyone elses') time. Also, posting helps me maintain my perspective of this stock (and a few other REIT's).

Today I am posting a Two and a half year chart. I think it is time to re-appraise where cpa has come from and where it might be going to (mainly because I sold my last parcel at $0.935 and the share price kept going).

CPA has a NTA of $1.10. At $0.96 it has; a yield of 5.88%; an earnings per share (eps) of $0.0997; a dividend of $0.0564 per share; and a price earnings ratio of 9.63. This is a fairly solid share, discounted approximately 13% to NTA. This discount is fairly tight when you compare it to other REIT's.

Despite the number of open "short" sales on cpa registered with ASIC as at three days ago (48 million), I have revised my entry points on cpa upwards. I could be disasterously wrong, often am, so I recommend that everyone do their own reasearch.

In the present economic envoronment with the xao arround the 4620 mark, I expect cpa to peak and retrace in the near future and will be looking for re-entry points on the dip.

 

[nulla nulla]

While the xao was tanking by 88 points, cpa was busy defying the odds and holding $0.97 interday before holding $0.965 in the close.
Narrowing the gap against nta with the AUD$ holding at U.S$1.05 is nothing short of amazing. Huge number of open short trades and cpa appears determined not to buckle.

Can it go higher or will the shorters prevail and send the share price down? DYOR. I have a few buy orders in the lower ranges ...just in case cpa buckles under the load.

 

[nulla nulla]

While the xao has been suffering a creeping demise cpa has rallied and held its' recent highs. Moving in the tight band between $0.95 and todays interday high of $0.975 . I have found it impossible to trade.

It trades ex-div tomorrow maybe there will be an oversell providing an entry opportunity, maybe pigs will fly as well. The open shorts list with ASIC has dropped from 52 million to 40 million (probably some of them deciding against holding it short when it goes ex-div and being liable for the dividend). Hopefully cpa will settle back into the trading range between $0.89 and $0.975.

 

[nulla nulla]

CPA appears to be finding reasonable volume support at the $0.935+ levels. Could finaly be closing the gap between Share Price and NTA. The current support accross most of the Australian REIT's certainly is flowing into CPA.



Could have something to do with the quality properties making up the portfolio. Then again it could be short term irrational exuberance waiting to catch the unwary (Two bob each way, DYOR).

 

[nulla nulla]

Volumes seemed to drop off this week, possibly because the overseas hedge fund building a stake has stopped buying up. The share price has drifted down to test $0.92 yesterday and today. Hopefully the previous resistance level at $0.915 can become a support level keeping the share price in closer proximity to the nta.



If not the next support level is $0.895.

 

[nulla nulla]

It is possible in the present destabilised environment for cpa to continue downward.

I had two (2) low ball bids waiting in the queue at $0.91 and $0.89. The bid at $0.91 (50k) was filled on Monday and the bid at $0.89 (50k) was partially filled (25,240 in two dips below $0.895) on Tuesday. CPA relased a notice to the ASX in regard the sale of Perth Assets and a resulting special dividend to be announced with the annual results in August. The share jumped back up to $0.90 - $0.905 when it re-opened and closed for the day on $0.905.

After last nights fallout on the international scene it would not surprise me if the rest of my order at $0.89 is filled today.

 

[nulla nulla]

Got the rest of my buy order at $0.89, then the price fell through to $0.885. At one stage the share price looked like going through to $0.88 then held with good support at $0.89 - $0.895. Volumes were good and having opened at $0.89 and closed at $0.895 means we have the first green bar on the chart after 11 red down days.



A bounce from here would be good, but I suspect it may be the proposed capital return from the sale of the Perth assets to be announced on 16 August that is helping prop the price up while the rest of the REIT's are sliding. We live in interesting times.

 

[nulla nulla]

Bouncing off $0.885 cpa moved upward on moderate volumes to test $0.93 today. The support wasn't strong enough to make much impression on $0.93 with the bulk of the turnover at $0.925. Never-the-less, cpa appears to have bucked the downward trend and being office based it is not suffering the downward presure like those reits with a significant retail exposure in their portfolio's.



The report in respect of the capital return is not due for another 3-4 weeks. It will be interesting to see whether or not CPA holds at these levels or starts to creep back up on the back of good reports comming out of Europe/U.S.A.

 

[nulla nulla]

The reports comming out of Europe improved but world focus shifted to the U.S. debt ceiling and the political impasse developing over which political party has the solution and the votes to get it through. cpa took a dive back to $0.91 then announced that they had sold the George St Sydney building for a 15% profit on the December 2010 valuation and a big capital gain on the initial purchase price.

While the rest of the reit market (other than dxs & iof) drifted down, cpa surged up to $0.95 - $0.955 on the prospects of even more capital return to share holders topping up from the proceeds from the Perth office sales.

The anouncement that some of the proceeds would be used to retire debt, some may go back to unit holders and some would be kept for "opportunities" seemed to cool the punters. After tapping $0.96 interday, cpa fell back to $0.95 in the close.



With the uncertainty in the international arena, I elected to sell off at $0.95 and take my profit off the table. It may go up again next week but I'm sure there will be further opportunities down the road.

 

[nulla nulla]

The market tanked following the international guidance and cpa dropped like a stone with the market, touching $0.89. The announcement that they have sold a 50% share in the "Money Box" building (Former Commonwealth Bank Building in Sydney CBD) helped arrest the fall and cpa climbed bak to $0.915 - $0.92.

The U.S rating down grade, announced after close of market, will make Monday and Tuesdays price action interesting.

From the proceeds of sale CPA will be:

1. Retiring debt;
2. Making a return to unit holders by special distribution; and
3. Looking for suitable oportunities.



With the sales, retirement of debt and return of proceeds to unit holders the NTA per share will drop accordingly. However the reduced debt levels and current strength of the portfolio along with the return to share holders, should be attractive enough to prevent a fall anywhere near like the one in the gfc mkI. IMO dyo as always

 

[UMike]

Back in again.

Looking forward to the FY11 results 16 August.

 

[nulla nulla]

CPA held up at $0.855 against the panic trend on Tuesday only to falter and double bounce off $0.84 on Thursday and Friday. While the rest of the ASX (except banks) lifted today, cpa went into reverse with volumes turning over as it pushed down through $0.845 to $0.84. While the share price clawed a little back before the close to $0.85 the over all picture is not promising.



The MACD shows that the share price is gapping down with the gap opening up. Volumes were up earlier in the week but were not as high today.



The RSI shows the share price is oversold but the sell strentgh suggests there could be a little more downside to come.



The good news is that cpa is about to announce the results for this year on Tuesday 16 August. They should also be advising of the extent of the special dividend from the proceeds of the sales of 3 Perth properties and 1 & 1/2 Sydney properties.
IMO cpa is due for a bounce and I would be surprised if we don't get one early next week. Then again Germany could announce that they need a bailout as well as France, Italy, Spain, Portugal, Ireland and Greece and our market will have another melt down. As always DYOR.

 

[nulla nulla]

So much for the announcement. The special div from the proceeds of the Perth sale (which I expected to be increased from the proceeds of the Sydney sales) has now become a "potential" special div of $0.006 cents per share. Yep less than one cent per share, impressive eh.



The price spiked up to $0.90 along with the bounce from the rest of the market but dropped back to $0.855 with Thursdays and Fridays market reversal and I will not be surprised to see it test lower on Monday/Tuesday next week. Normaly I would be looking for a trade entry arround this level but with the herd sentiment the way it is I am proceeding cautiously. As always dyor.

 

[nulla nulla]

A highly conditional take over bid for CQO came out of the woodwork and the gap between the share price and the NTA closed dramatically. There was a definite flow on effect accross the Australian reit sector and cpa went along for the ride jumping to $0.935. Still at a huge gap to nta.

 

[UMike]

Well I've been first in line at 95.5c for a while now. Might sell today regardless.

 

[nulla nulla]

cpa continued to climb throught the week reaching $0.97 before retracing today but but managed to hold $0.96 at close.



Question now is whether it can go higher (on the Australian REIT takeover & merger hype) or is it about to dive under the influence of sovereign debt issues? All we can do is watch and trade when we feel brave enough.