Increasing income from property
Nicholas Grove  |  16/04/2014Text size  Decrease  Increase  |  

Nicholas Grove: I'm Nick Grove at the Morningstar SMSF Strategy Day in Sydney and I am joined by APN Property Group's Pete Morrissey. Pete you and your team tend to ignore index weights. Can you briefly explain why it is you do this?

Pete Morrissey: One of the key things for us obviously is income. And a lot of the large-cap index players, such as Westfield, they have a lower level of income than what we would like to see. Another thing is that some of them - again The Westfield Group as an example or Goodman - they have a lot of offshore exposure, while our fund is primarily focused on domestic and achieving a domestic rent. So we are willing to take bids away from those types of names because they are lower income and get better income ahead of domestic-focused managers that may not be at front of mind for many investors but can provide high yield and offer the quality of asset that we are after.

Grove: And where are you seeing a bit of value at the moment in the Australian listed property space?

Morrissey: Well for a long time I think now the industrial sector for the last two or three years, probably even post-GFC, has looked increasingly good. It's hard to get an exposure there - there are only a few names. The development tap was turned off immediately after the GFC and not a lot has been done since. There is strong demand obviously - the evolution of online shopping and those sorts of things, these warehouses are required. So it's really important and there is some good value there for sure.

Retail again - that's had a tough time since the GFC and there is some value in some of the less obvious names that we invest in, away from the ones that are front of mind like the likes of Westfield.

Grove: Pete thanks very much for your time today.

Morrissey: Okay. Thank you, Nick.

Grove: I'm Nick Grove at the Morningstar SMSF Strategy Day in Sydney.

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