I've had a good read over the results now as well as listening...

I've had a good read over the results now as well as listening into the shareholder presentations plus Q and A session. I've also got a zoom call with the fund manager booked for Monday so have been compiling a list of questions and will post any interesting insights I find in here. These are my key thoughts so far:

NTA: I still think we might get one further write down in the property book (and I would rather factor it in now and then take is as a bonus if we've already reached the bottom) which would take us down around $3.50 (a further 3.7% NTA decline from here and a decline of 13% from the $4.03 NTA peak two years ago). This represents an NTA discount of 19.5% to the current SP (which has already shot up) at an unfranked distribution yield of 7.3% based on the most recent closing SP and the bottom end of the updated guidance range. I've got an approximate fair value in my head for DXC as being a 10 percent discount to NTA so that would make my current valuation $3.15 at what is hopefully close to the bottom of the cycle.

Strategic Direction: I've noticed a real change in the language management is using as they've become far less bullish on acquisitions outside of the convenience retail space (or any acquisitions at all) and even a buyback seems to be off the table in the short term (according to the earnings call the recent buy back announcement to the market was simply required to keep that option open for the next 12 months and there are no immediate plans to activate it).They have stated that they want to maintain gearing at the mid point of the guidance range (between 25 and 40 percent) which is almost exactly where we are now at 32.2% post the settlement of the SA property in March. This is going to eat into our dividends at some point especially considering the sites being sold are high yielding so I'd like to question them further on just how far they want to go with the asset disposal program considering valuations seem to be stabilising and there's market evidence of 53 sites changing hands around the book cap rates in the last 12 months (well down on previous years but still enough to represent market evidence in my view).

Glass House Mountains: This is seemingly about to commence and I'm keen for it to go ahead as I think it will be a bit of a potential view into the future for this asset class. The key for me is the 45% exposure to convenience and fast food tenancies which is well up from the current portfolio average around 10%

Comparison to Waypoint: I've always watched the large gap between the Waypoint WACR of 5.68% and ours of 6.3% and questioned why it's so wide. I've just been looking at some portfolio comparisons and the major difference is they have a larger exposure to Metro/Capital city sites at 80% of the total portfolio whereas we are sitting at 65%. The cap rate differences are even wider here though with our metro sites on the books at a 6.2% cap rate whereas Waypoints are all the way down at 5.05%. Due to the large portion of independent valuations required each year I would say some of this gap must just be down to the quality of individual assets however I would hope it also means that we've already been conservative with our valuations at DXC and logic would suggest that means they shouldn't have as far to fall from here.

Question

Just on a side note does anybody know how DXC is actually calculating their gearing figure of 32.6%? I've been looking at the recently released balance sheet to try and develop a bit of a model which allows me to calculate adjusted NTA's and Distributions in line with interest rate changes and valuation changes.

Dividing total liabilities by total assets comes out at nearly 35% which is clearly wrong but then if I just add borrowings to other liabilities (leaving out provisions) and divide that by investment properties plus cash and equivalents it still comes out wrong at 34%.