The Glass House Mountains properties (Northbound and Southbound)...

The Glass House Mountains properties (Northbound and Southbound) already have existing petrol stations/retailers. The properties were purchased on a yield of 4.9% in the first half of 2022 (low yield, but only 21% site coverage). So, I don’t believe there is a meaningful holding cost situation with these assets.

More importantly, according to page 13 of the year-end results presentation, construction of the Glass House project is to begin sometime in the next couple of months. DXC’s share price has been trading at a significant discount for more than two years. Even if the pin could not be attractively pulled on the project because of a building contract, the entire land/project could be sold. Some investors find it attractive to purchase a property with existing approvals and agreements. Also, petrol station properties are selling:

https://www.australianpropertyjournal.com.au/2024/07/01/investors-pumped-about-petrol-stations/

During the whole time we’ve experienced the remarkable dislocation between NTA and share price among recession proof REITs like DXC, DXC management bought shares back for about three months, between March 2022 and June 2022, for a total consideration of about $4.4m, which is about the price of one petrol station property.

If you subscribe to the theory of interest rate cycles, the purchase of discounted DXC shares over the past two years will likely yield an attractive total return (especially on a risk-adjusted basis). A question we may need to consider: Could the persistence of DXC in advancing the Glass House project for the last 2.5 years be more about increasing assets under management rather than boosting earnings per share?