Ann: Dividend/Distribution - COF, page-27

86% of COF leases are expiring past FY25 and 79% of properties are rented by government, ASX listed companies or multinationals. Overall asset mix is strong and would require substantial economic uncertainty to dislodge this advantage.

Residential carries more weight on the sector and is more inclined to disrupt the economy when equity drops, people start defaulting or selling etc. I see the retail and industrial sector differently. Owners of these assets are more established and financially prudent so not to fall into the same trap as home borrowers have found themselves in.

Recent fall in REIT prices is nothing but fear-based and fear tends to exacerbate the reality of the situation. Employment is strong despite mortgage rates almost doubling in less than 12 months.

I agree that if commercial real estate is revalued down sharply it would pose a problem as you have stated. For this to happen there would need to be a few comparable properties in the area offered up for sale at said discounts. This would signal a significant market decline which is unlikely with strong employment. With strong employment we are likely to need more commercial premises nationally, hence prices should rise.

I see this fear-based drop milder than the COVID induced panic. COVID actually had significant material impact on occupancy rates and revenues which I doubt that "back to average historic low" rate hikes will have. Although COFs portfolio strength did not realise a material impact to earnings (given its strong lease contracts) the broader sector did.

IMO this is way oversold. Recent developments point to a banking crisis which can only be resolved through guarantees and quantitive easing. RBA has already signalled a recent step down in inflation and likely pause in interest rate hikes. They can likely see that further aggressive rate hikes will steer the economy off a cliff. We will see what happens tomorrow with the FED interest rate announcement.