CPA - Commonwealth Property Office Fund

[nulla nulla]

Rangebound for the week between $1.05 and $1.06, CPA managed to spike up to $1.07 in the close on Thursday. Hard to work out a true position for cpa in the lead up to xmas, the settling of options contracts on Thursday and Dividend strippers jumping in late did't help either..



The dive to $1.02 in the closing auction on Friday was an entry point for me, however it may go lower before it rebounds. There is nothing certain in the market and the present environment is even more unpredictable. As always do your own research and good luck.

 

[Garpal Gumnut]

Rangebound for the week between $1.05 and $1.06, CPA managed to spike up to $1.07 in the close on Thursday. Hard to work out a true position for cpa in the lead up to xmas, the settling of options contracts on Thursday and Dividend strippers jumping in late did't help either..

View attachment 50101

The dive to $1.02 in the closing auction on Friday was an entry point for me, however it may go lower before it rebounds. There is nothing certain in the market and the present environment is even more unpredictable. As always do your own research and good luck.

Thanks nulla,

A good buy. $1.00 is good support level for CPA which I hold. A good stock.

It has been resistance and support over the last 12mo.

gg

 

[UMike]

I am looking at jumping back in. $1.01 is my bid price.

Lets see what lead we get from the states this week end.

 

[nulla nulla]

Since going Ex-civ cpa has been in a tight trading range between $1.02 and $1.05. Todays sell down broke through the recent support level of $1.02 closing on $1.015. The three year chart shows that this is close to the previous long range resistance level of $1.01 which had become a support level in the last 7 - 8 months. The closing price is also close to breaching the lower channel bar of the upward/sideways trading trend since December 2010.



Personaly I would be surprised to see a significant downturn in the cpa share price below this level. The ongoing fundamentals of Earnings, ROE, Distribution, Yield, discount to NTA and their low debt ratio wouldn't justify a massive sell down. In my humble opinion the present sell down is more likely to be someone taking advantage of most of the brokers being on annual leave, pushing the price down so they can accumulate. But then again what would I know. As always do your own research and good luck.

 

[UMike]

Since going Ex-civ cpa has been in a tight trading range between $1.02 and $1.05. ......

Well After closing above this tight trading range hopefully it can continue trading along the channel.

 

[nulla nulla]

CPA continued to track sideways this week with entry opportunities for the quick or those already in the queue at $1.01. Exits anywhere between $1.035 and $1.055 for those looking for a quick return. Prospects for a further run up next week for those with appetite for risk and a willingness to let their profits run (with a tight trailing stop loss no doubt).



As always do your own research and good luck.

 

[Garpal Gumnut]

Since going Ex-civ cpa has been in a tight trading range between $1.02 and $1.05. Todays sell down broke through the recent support level of $1.02 closing on $1.015. The three year chart shows that this is close to the previous long range resistance level of $1.01 which had become a support level in the last 7 - 8 months. The closing price is also close to breaching the lower channel bar of the upward/sideways trading trend since December 2010.

View attachment 50250

Personaly I would be surprised to see a significant downturn in the cpa share price below this level. The ongoing fundamentals of Earnings, ROE, Distribution, Yield, discount to NTA and their low debt ratio wouldn't justify a massive sell down. In my humble opinion the present sell down is more likely to be someone taking advantage of most of the brokers being on annual leave, pushing the price down so they can accumulate. But then again what would I know. As always do your own research and good luck.

I'd agree with your assessment.

CPA has been good to me since the GFC.

I would only sell if it dropped to below 90c., which is significant support now.

Otherwise I'll hold for the reasons above.

A 5 year monthly chart

gg

 

[Hughesy]

HI

Sorry if i am asking this question in the wrong section. (newbie)

Is anybody aware of the original price that the Commonwealth Property office fund floated at.

Thanks

 

[skc]

HI

Sorry if i am asking this question in the wrong section. (newbie)

Is anybody aware of the original price that the Commonwealth Property office fund floated at.

Thanks

Looks like it floated in 1999 at $1.

http://www.asx.com.au/asx/statistic...play=text&issuerId=4006&announcementId=273884

 

[coolcup]

The key game changer for CPA is potential M&A. As one of the few externally managed pure play A-REITs left in the sector it is vulnerable to a takeover if CBA ever want to sell or liquidate their management rights. With strong demand from offshore pension funds for Australian income producing rental assets (like CPA's office buildings) this will be of major interest for players such as Dexus or Charter Hall, backed by sovereign wealth funds. At it's size as well, it is relatively bite size. Otherwise it is really a hold for a not so great yield.

 

[nulla nulla]

The key game changer for CPA is potential M&A. As one of the few externally managed pure play A-REITs left in the sector it is vulnerable to a takeover if CBA ever want to sell or liquidate their management rights. With strong demand from offshore pension funds for Australian income producing rental assets (like CPA's office buildings) this will be of major interest for players such as Dexus or Charter Hall, backed by sovereign wealth funds. At it's size as well, it is relatively bite size. Otherwise it is really a hold for a not so great yield.

I find it hard to second guess a merger or acquisition where CPA is the target. CPA has quality assets in Sydney & Melbourne with good assets elsewhere as well, CPA has entered into an arrangement with Grollo for future developments and possible acquisitions in Melbourne, CPA is not paying out all of their earnings holding some back. CPA was running a share buy back (probably using up some of the income held back) but hasn't been participating in the buy back lately. Seems CPA is happy to buy when the price is low and content to sit out the buy back when the price is high. I'm fairly confident that they have not exhausted the funds availabel from retained earnings and sale of non core assets.

It would not surprise me if someone was to launch an opportunistic take over offer for CPA, but they would have to pay a premium over the current price. I wouldn't be surprised to see CPA size up one of the smaller REIT's for a takeover themselves. Cheap money arround and a further capital raising from sophisticated and retail investors would probably give CPA a war chest big enough to swallow a couple of the smaller ones.

I wouldn't know, I'm often wrong. Just my two (2) cents worth. As always do your own research and good luck.

 

[coolcup]

I find it hard to second guess a merger or acquisition where CPA is the target. CPA has quality assets in Sydney & Melbourne with good assets elsewhere as well, CPA has entered into an arrangement with Grollo for future developments and possible acquisitions in Melbourne, CPA is not paying out all of their earnings holding some back. CPA was running a share buy back (probably using up some of the income held back) but hasn't been participating in the buy back lately. Seems CPA is happy to buy when the price is low and content to sit out the buy back when the price is high. I'm fairly confident that they have not exhausted the funds availabel from retained earnings and sale of non core assets.

It would not surprise me if someone was to launch an opportunistic take over offer for CPA, but they would have to pay a premium over the current price. I wouldn't be surprised to see CPA size up one of the smaller REIT's for a takeover themselves. Cheap money arround and a further capital raising from sophisticated and retail investors would probably give CPA a war chest big enough to swallow a couple of the smaller ones.

I wouldn't know, I'm often wrong. Just my two (2) cents worth. As always do your own research and good luck.

CPA's deal with Grollo was very poorly received by the market. They bought assets at valuation by issuing scrip at a discount to NTA, part of which was issued to Grollo - not smart and poorly receive. Credibility somewhat restored following a long buyback which has effectively returned all the capital they raised for the Grollo deal back to investors. They don't really have the cost of capital to acquire high quality office assets accretively so are a bit of a lame duck relative to competitors such as DXS. Likelihood of investors supporting a "war chest" capital raising in the REIT sector is very very low. They would need to bring the assets to the table. They are one of the few externally managed REITs left and pay a fee to CBA for collecting rent. Will be interesting to see how things play out.

 

[nulla nulla]

CPA's deal with Grollo was very poorly received by the market. They bought assets at valuation by issuing scrip at a discount to NTA, part of which was issued to Grollo - not smart and poorly receive..

Actually the issue was well supported. Unfortunately issues of this nature (to fund an expansion) always go at a discount to market price and NTA as the sophisticated investors and Fund managers want a discount as incentive to stump up their capital. Also unfortunate is the actvivty of some fund managers (and sophisticated investors) in that they will sell down the shares they already hold to close to the issue price, so as to partly finance their acquisition in the capital raising and profiteer by buying more at the low price. Better long term return on their capital.

Credibility somewhat restored following a long buyback which has effectively returned all the capital they raised for the Grollo deal back to investors.

The "long" buy back is another story. CPA has not used up all the available capital in their buy back. This is easily verified by comparing the volumes they projected they "might" buy back when it was first launched against the volumes bought back and cancelled. The "long" buy back is all the more interesting as CPA stopped buying the shares when the price went above $0.98, although they still confirm that the buy back is still afoot. This is because CPA believe they can best enhance shareholder value by buying when the price is low. When the price is high they sit out of the market and put the capital to work on projects or opportunities as and when they arise.

They don't really have the cost of capital to acquire high quality office assets accretively so are a bit of a lame duck relative to competitors such as DXS. Likelihood of investors supporting a "war chest" capital raising in the REIT sector is very very low. They would need to bring the assets to the table. They are one of the few externally managed REITs left and pay a fee to CBA for collecting rent. Will be interesting to see how things play out.

CPA floated at $1.00 in 1999. The float was well supported and CBA also took a holding which I am advised they still hold at about 7% of issued capital. The float was offered to a lot of retail share holders (through comsec and others) and I suspect a lot of original investors are still there. The returns they have received over the years have fully repaid their outlay:

ExDate	PayDate	Amount	Franking %	Annual
		Most Recent		Total
12-Aug-99	30-Aug-99	1.51	0.00%	1.51
7-Feb-00	28-Feb-00	3.81	0.00%
8-Aug-00	28-Aug-00	3.97	0.00%	7.78
7-Feb-01	28-Feb-01	4.05	0.00%
8-Aug-01	28-Aug-01	4.36	0.00%	8.41
19-Feb-02	1-Mar-02	4.41	0.00%
13-Aug-02	30-Aug-02	4.49	0.00%	8.90
23-Dec-02	28-Feb-03	4.62	0.00%
7-Apr-03	24-Apr-03	1.10	0.00%
24-Jun-03	29-Aug-03	4.63	0.00%	10.35
23-Dec-03	27-Feb-04	4.78	0.00%
24-Jun-04	27-Aug-04	4.80	0.00%	9.58
23-Dec-04	25-Feb-05	4.83	0.00%
24-Jun-05	26-Aug-05	4.80	0.00%	9.63
22-Dec-05	28-Feb-06	4.83	0.00%
26-Jun-06	25-Aug-06	4.84	0.00%	9.67
21-Dec-06	28-Feb-07	4.86	0.00%
21-Dec-06	28-Feb-07	0.22	0.00%
25-Jun-07	24-Aug-07	4.87	0.00%	9.95
21-Dec-07	27-Feb-08	4.60	0.00%
24-Jun-08	22-Aug-08	4.60	0.00%	9.20
23-Dec-08	27-Feb-09	4.60	2.00%
24-Jun-09	27-Aug-09	4.20	0.00%	8.80
23-Dec-09	25-Feb-10	2.65	0.00%
24-Jun-10	26-Aug-10	2.90	0.00%	5.55
23-Dec-10	24-Feb-11	2.75	0.00%
24-Jun-11	25-Aug-11	2.75	0.00%	5.50
22-Dec-11	28-Feb-12	2.89	0.00%
25-Jun-12	28-Aug-12	3.20	21.00%	6.09
21-Dec-12	28-Feb-13	3.20	0.00%	3.20
Total		114.12		114.12

The share price has dropped away from the highs pre GFC but the recent price action looks very similar to the trading in the early mid 2000's:



It is not impossible for someone to mount a take over offer for CPA, lets face it CPA is a good target: They have premium office assets in Sydney and Melbourne. All with good occupancy and high rental revenue and the debt gearing ratio of CPA is one of the lowest of all A-REIT's. Any take over offer would have to be at a big premium to get CBA and the other major shareholders over the line and I just find it highly unlikely. Just my humble opinion. I'm not in love with CPA, I just trade it when the conditions are right for me. As always do your own research and good luck.

 

[nulla nulla]

Surprisingly, the yield hunters don't seem as enamoured with CPA as the are with a few of the other A-REIT's. CPA has come off its' highs and seems to be rolling sideways between $1.075 and $1.10. To tight for me and a bit odd when you consider the Earnings, ROE, Yield and discount to NTA.



The volitility continues to provide oportunity for the brave and insane. I might sit this out until the next episode of the "Fiscal Cliff" has run its' course. As always do your own research and good luck.

 

[nulla nulla]

The CPA share price continues to move in a tight volitile range. However hugging these upper price levels makes it hard to jump in with any confidence.



The yield is still attractive at this level and there are plenty of buyers but I'm finding the share price spread too tight for me to risk a trade. There seems to be plenty of opportunities elsewhere atm. As always do your own research and good luck.

 

[UMike]

Got rid of my package Friday.....

Despite the recent acquisition being good news IMO I thought I'd cash in my gains.

Happy to buy in on some of these volitile fluctuations.

 

[nulla nulla]

I hope you got a good price. With the shift of investors out of gold, higher yielding stocks like A-REIt's may get pushed a little higher before yield get compressed too much and P/E ratios get too high. Then again gold could bounce and the A-REIT's retrace from Fridays peaks giving the quick another opportunity.

 

[nulla nulla]

This last couple of weeks CPA has continued to hold up at the new higher range. It is hard to work out whether CPA can move up from here or will be supported at this level by foreign investors taking advantage of the yield or superfunds spreading their money arround the A-REIT portfolios.



Possibly $1.15 - $1.16 may be a new support level? As always do your own research and good luck.

 

[UMike]

I hope you got a good price. With the shift of investors out of gold, higher yielding stocks like A-REIt's may get pushed a little higher before yield get compressed too much and P/E ratios get too high. Then again gold could bounce and the A-REIT's retrace from Fridays peaks giving the quick another opportunity.

Yea I managed to buy back in half the initial investment 8c lower than the sale price and Placed an order at $1.075 today for the other half, 10c lower.

It's been almost a month since your last post do you think much has changed or has it just retraced a bit with the rest of the market????

 

[nulla nulla]

CPA held the support level arround $1.16 for several weeks. However a reality check to the Australian economy through the sell down of the Aud$ meant that off-shore parties buying in when the Aud$ was above US$1.00 were now experiencing a devaluation of their investment. No doubt their selling pushed through a few stop losses which in turn caused more selling, pushing through more stop losses.



The big sellers of the dollar (Goldman Sachs probably following Soros's lead) have nominated 2014 year end expected targets and 2015 year end expected targets for the Aud$. The only problem is, that like gold, the 2014 year end targets were arrived at a bit early. No doubt if the Aud$ trends down, more off-shore investments in A-REIT's will be pulled. On the other side of the coin, as the Aud$ drops the present share price will become attractive to other off-shore investors seeking yield rates better than bond rates etc and the buyers should match the sellers or possibly push the prices back up...maybe? I'm hoping CPA can hold $1.10 as a support level. The yield coming up late this month should help. As always do your own research and good luck.