Australian (ASX) Stock Market Forum

DXS - Dexus Property Trust

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ASAP said:
DXS announces 5% share buy back.
The share price should increse by 5%
Click to expand...

How did you work that out since you don't know at what price they will be buying them back at?
 
Gringotts Bank said:
lol

Looks like there's no need for me to hold since this buyback is happening at some stage over the next 12 months.
Click to expand...

All else being equal, buyback helps support the share price. Fundamentally if done at below "fair value" it could increase NTA or earnings per share, leading to potentially higher valuations.

But not all buybacks achieve such goal. Both CSL and CFE have been buying back for years and but see high different their chart looks...
 
skc said:
All else being equal, buyback helps support the share price. Fundamentally if done at below "fair value" it could increase NTA or earnings per share, leading to potentially higher valuations.

But not all buybacks achieve such goal. Both CSL and CFE have been buying back for years and but see high different their chart looks...
Click to expand...

Thanks. They say the buyback is based on current share price, which I take to be today's open or close or VWAP. But no broker has been appointed yet.
 
When investing in DXS one must always consider the strength or otherwise of the major Melbourne and Sydney CBD office markets. The outlook for white collar employment is a key consideration as it drives corporate demand for office space. Clayton Utz recently handed back several floors to DXS at its iconic 1 Bligh St asset in Sydney as they could not sub-lease the space to another occupier until they needed it several years down the track. Incentives in these markets are very high (>30%) in order to attract tenants. This means that free cash flow may be hurt over the next few years meaning limp dividend growth.

DXS move to increase its payout ratio, helps the headline dividend number, but if earnings aren't increasing at a steady rate then dividend growth will be capped. It is expected dividend growth that drives the pricing of REITs.

Just my thoughts for consideration.
 
skc said:
How did you work that out since you don't know at what price they will be buying them back at?
Click to expand...

They are buying 5% over the next 12 months.
Usually taking away 5 % of the supply will increase the value of the product by 5%..
What is your opinion?

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coolcup said:
When investing in DXS one must always consider the strength or otherwise of the major Melbourne and Sydney CBD office markets. The outlook for white collar employment is a key consideration as it drives corporate demand for office space. Clayton Utz recently handed back several floors to DXS at its iconic 1 Bligh St asset in Sydney as they could not sub-lease the space to another occupier until they needed it several years down the track. Incentives in these markets are very high (>30%) in order to attract tenants. This means that free cash flow may be hurt over the next few years meaning limp dividend growth.

DXS move to increase its payout ratio, helps the headline dividend number, but if earnings aren't increasing at a steady rate then dividend growth will be capped. It is expected dividend growth that drives the pricing of REITs.

Just my thoughts for consideration.
Click to expand...

This is true, From what i have seen A-REIT's coincide with the equity market rather then the property market.

- - - Updated - - -

I am a holder in this stock and I do not understand the wild swings DXS and MGR are having at the moment. I think it is evident that Australian CBD property is coming back according to RP data and they are still paying good dividends.

Some one elaborate.

I know the stocks are effecting my bond yields. But explaining this in further would be handy.
 
ASAP said:
They are buying 5% over the next 12 months.
Usually taking away 5 % of the supply will increase the value of the product by 5%..
What is your opinion?
Click to expand...

Doesn't work that way.

If they're buying for $0 then yes it is taking away 5% of the supply.

You also don't know whether ppl are going to take this opportunity to sell into liquidity.

5% of total issue is 242m shares. Today it traded 29m, so its about 10 days worth of turnover.

But over a year? This can be easily absorbed without affecting price much.
 
For discusions sake, if the share is priced in proximity to nta backing for each share and you reduce the number of shares, while the underlying value of the overall assets will not change, the nta value per share will increase.

If the share price stays the same, then a gap will arise between the share price and the increased value of nta. If the earnings generated by the unchanged assets stays the same, then the return per share should improve as there is 5% less shares in the pool to share the earnings. Accordingly the share price should increase at market to close the gap to NTA and reflect the higher earnings per share.
 
nulla nulla said:
For discusions sake, if the share is priced in proximity to nta backing for each share and you reduce the number of shares, while the underlying value of the overall assets will not change, the nta value per share will increase.

If the share price stays the same, then a gap will arise between the share price and the increased value of nta. If the earnings generated by the unchanged assets stays the same, then the return per share should improve as there is 5% less shares in the pool to share the earnings. Accordingly the share price should increase at market to close the gap to NTA and reflect the higher earnings per share.
Click to expand...

Shares on issue decrease, but cash on balance sheet will fall - so assets really do fall.
Value is increased only if the shares are purchased at below book value...nothing like buying $1 for 50 cents!
 
VSntchr said:
Shares on issue decrease, but cash on balance sheet will fall - so assets really do fall.
Value is increased only if the shares are purchased at below book value...nothing like buying $1 for 50 cents!
Click to expand...

Fair point. The asset increase is only marginal where the share is being bought back at a share price less than the nta. However should earnings stay at the same level the earnings per share would lift.
 
nulla nulla said:
This article is worth a read

http://www.theaustralian.com.au/bus...in-rival-to-15pc/story-fn9656lz-1226685258206

Dexus acqiures a 14.9% stake in CPA. Seems that they may have been lurking on the CPA share register under 5% for some time.
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DXS are in the prime position to buy CPA. I wouldn't be surprised if GPT is also lurking at sub 5%. 14.9% only blocks a normal takeover (which needs 90% acceptance prior to moving to compulsory acquisition), but it won't of itself block a scheme of arrangement (which needs 75% approval), albeit it is a very good position to be in. This deal will be done via scheme of arrangement (ie friendly) rather than hostile particularly given private capital money is likely to be involved (in DXS case via DWPF and for GPT participation by GWOF) and given CBA's presence.

DXS is in a win win position. Either it wins the deal on metrics that are sensible or it loses to someone else who is willing to pay more, in which case they get an uplift on their 14.9% stake. I don't think the deal will be hugely earnings accretive for DXS (sub 5%) though given relative scale and the fact that both group's trade on similar P/Es. This is all about expanding footprint in the key Sydney and Melbourne CBD markets and becoming the "office proxy" in Australia for global investors to invest in.
 
Dexus appears range bound at the moment as it waits for Deutsche Bank to accumulate the desired 14.9% holding of CPA. I wonder if they are looking over their own shoulders to see if anyone is accumulating a similar level of holding in themselves? Turnover is pretty solid recently in a range between $0.99 and $1.015+.

dxs 2013-09-27.png

As always, do your own research and goodluck. :).
 
After travelling sideways for a few weeks (since announcing the take up of 14.9% interest in CPA) Dexus has bounced through the resistance level of $1.04. Question now is whether it can maintain the momentum and move above the $1.06 level than $1.10?

dxs 2013-10-04.png

The RSI shows that Dexus has broken away from the moving average and moved into the "overbought" area, suggesting that a retrace to the moving average could be expected. The recent volumes of turnover are slightly below average but this is likely the impact of the Congresional argy bargy going on in the US creating uncertainty in all markets. Compared to other shares the daily volumes on Dexus are fairly high indicating that there is still a lot of trader interest in this share. Either that or some-one is playing an accumulation game moving in and out to keep their average cost down?

dxs 2013-10-04 RSI.png

Of course if the share price holds these levels or continues to track upwards the moving average will move upward also reducing the "overbought" perspective. Don't get me wrong, I'm not complaining, the volitility can create oportunities for the quick, the brave and the insane. As always do your own research and good luck. :)
 
Dexus flip flopped arround this week along with most of the A-REIT's mostly between the $1.02 and $1.06 range. Dipping then rebounding to close out the week at $1.06 on release of the take-over offer for CPa at $1.15 per share, made up of cash ($0.68) and scrip (.4516 dexus share for every cpa unit held).

dxs 2013-10-11.png

Hard to see whether Dexus will ramp upwards (like gpt initialy did when they sounded out Australand) or whether it will continue arround the present range?

As always do your own research and good luck. :)
 

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