Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources , and more. Learn More. For readers who have never heard of this one before, the REIT owns a large portfolio of office buildings around Australia and leases them to tenants.
The Federal government is the biggest tenant, with Other government entities are also sizeable tenants, such as the WA government 4. It has a weighted average lease expiry WALE of 4. The occupancy rate in the first quarter of FY24 was There has been a lot of commentary on working from home reducing the demand from businesses. It recently said:. Contrary to speculation that working from home will have an ongoing adverse impact on tenant demand, these markets have shown strong net absorption during the period.
By contrast, the weaker markets with more exposure to tech and financial services, Sydney and Melbourne CBDs, have continued to trend down in leasing activity. COF's exposure to positively performing markets contributes to COF's robust leasing results, supporting the high portfolio occupancy. Management also suggested there will be a material reduction in future supply because of construction costs and return requirements.
It's expecting to make funds from operations FFO , or rental profit, of That means it's valued at under 10 times FY24's estimated profit. Investors are saying the underlying business is worth a lot less than it was a few years ago. But, management would say the business is doing better than what the market is suggesting, as we've just heard about above. It recently announced the divestment of two assets to repay debt, at prices that were only slightly below its balance sheet values at 31 December At 30 June , its portfolio saw a 4.
While the assets are probably worth less than they were a few years ago, particularly in a higher interest rate environment, this ASX REIT could keep paying a big yield and it could benefit when interest rates start falling again.
