Hi again guys,I spent an hour yesterday speaking with Jason...

Hi again guys,

I spent an hour yesterday speaking with Jason Weate who was kind enough to meet with me via zoom.

I thought it would be helpful to post what I learnt in here but just keep in mind that much of it is my own interpretation of what I was told and I did not take detailed notes.

Asset Sales Going Forward: Jason pointed out that DXC see a share buyback as being more viable if the gearing was down in the mid 20s and pointed to the recent takeover target NPR as an example of a small REIT that launched a buyback at the wrong point in the cycle and stretched themselves too thin when asset sales started to decline.

Overall management seem pretty bullish on the possibility for a more liquid petrol station market in 2024 with syndicates of private investors in particular seemingly having re-joined the pool of buyers.

The sites that DXC will consider offloading are smaller than average both in terms of dollar value and land size vs the portfolio average and are also single tenant (just the fuel operator). This makes up 15 to 20 percent of the portfolio. I get the sense that 18 months down the track we are likely to see a more consolidated portfolio with a smaller number of larger higher value sites and that they'd love to get the weighting of QSR rent to total income higher over time.

Just on this point I asked Jason whether the 45% QSR rental makeup of the Glasshouse Mountains development could represent a petrol station of the future and he seemed pretty bullish and said that the two sites would be something that a REIT could really build a portfolio around.

REIT Consolidation: Like many other market commentators Jason expected the NPR/BWP takeover to be the start of a period of broader consolidation in the REIT space. He pointed to this as a potential catalyst for a share price re rating at DXC along with the increased optimism that we're at the peak of the interest rate cycle.

Comparison with Waypoint: I asked whether a different valuation methodology was being applied at Waypoint considering their substantially lower WACR and got an indication that this is largely down to portfolio quality as Waypoint has a higher weighting towards larger metro sites that potentially have development interest once their lease expires. Jason said that Waypoint had traditionally traded at a premium to DXC however the gap had become unreasonably wide in the past 12 months considering DXC having a smaller scale.

I also got clarification on the gearing calculation and received updated broker reports from the 5 brokers who cover DXC post the latest results and all 5 still have them as a buy or accumulate with target prices between $2.80 and $3.50.

I came away from the meeting with my sentiment pretty much unchanged but feeling better educated.

I was looking to top up around the $2.55 mark pre results but think I've missed my chance now. In terms of my overall approach I was a bit over eager to load up this time last year when I first spotted the big NTA discount and relatively resilient asset class whereas there was really no rush due to the terrible sentiment on REITS. I averaged down through the year so my average price now sits at $2.60 with an 8 percent yield so I'm still relatively happy with how it's played out. I'll just keep watching and if we get a market correction looking to top up again as a long term income hold in my portfolio (I've changed to hold for now).