Noting the sale of 44 Market in Sydney, for a 17% discount to book.

The current NTA discount to the headstock is around 34%, which is pretty sizeable.

44 Market was at 85% occupancy, with a WALE of ~2.5.

DXS group occupancy is closer to 96%, with a longer WALE, so, selling an asset at a price discount that is less than the overall discount applied to the headstock is a good thing, at the margin, as is letting go of an asset that was struggling with its occupancy and near term rental reset pressure (the short WALE).

Our thesis with DXS is that the future for high quality office is much better than the apocalpyse that is priced into the shares.

Now, for some companies, particularly those with a) high gearing and b) older, less attractive assets, it really will be the end. There are a lot of zeroes out there.

But with DXS we think things should be okay. That yield of ~6.8% is pretty reasonable compensation, in a world in which management want staff to return to office, and where there is demand for good collaborative office space.

It’s definitely not a slam-dunk trade, it has hairs, and that’s why we are seeing the volatility. But in a diversified portfolio, we think it is a good risk-reward trade, and the asset sale is a better-than-expected outcome.

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