1. How is the value of an asset set now? Is it by the stroke of a bankers pen? Or the highest bid at an auction? Or, as many landlords are getting rudely surprised, by the imaginary numbers posted as true values on the land tax and rates bills? Which of the above is correct?
My Answer: NONE - it should be based on the rental yield it is achieving.
2. If residential property value are yielding 3% - which is roughly a 30x asset value... and commercial properties are yielding 8% - which is roughly a 12.5x asset value ... and GPT is earning about 500m in after operating costs... why is it only being valued at 4.5bn by the market? Would it be that if GPT owned houses, the market would value it a 30x 500 = 15bn ? Or based on commercial yields, 12.5 x 500 = 6.25b ?
3. Why is residential property on a 30x asset value anyway? Given the quality of tenant and long term ability to rent money is at best the same, if not worse, than a typical GPT tenant...
Rationality abandoned, if you ask me.
But you asked me NTA - so I would estimate somewhere around the 85c ++ mark.
GPT Price at posting:
$2.70 Sentiment: LT Buy Disclosure: Held
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