The gap between Waypoint valuations and DXC has always been...

The gap between Waypoint valuations and DXC has always been interesting to me too. I've actually asked management about it and they actually said there wasn't any real difference in valuation methodology between the two companies and it was largely down to Waypoint having a larger number of urban sites that could potentially have development potential for uses outside convenience retail. I factored in another small cap rate expansion at this set of results (which has played out a little better than I expected) and now hope that we can stabilise here. The other short term threat to think about is the hedged interest rate repayments rolling off onto higher rates and cutting into the distributions. Logically though it makes complete sense where we are at in valuation terms. If everyone can get a risk free return in the mid 4s then a service station on a long term lease with either fixed or cpi increases could still look pretty compelling in the mid 6s. Here in Geelong we've still got much lower grade industrial tilt slab sheds changing hands on yields below the cash rate which is something I never thought I would see.