Latest news with #MacquarieEquities
News.com.au
22-07-2025
- Business
- News.com.au
The Big Picture: With workers trickling back to the office, should investors follow?
Sydney office valuations have held up 'remarkably well', while Melbourne is lagging but recovering In 'Brizvegas', analysts expect a supply squeeze in the lead-up to the Olympics The RBA is almost certain to cut rates next month, thus supporting valuations Dubbed as one of the world's most hated asset classes during and after the pandemic, office property is emerging from its funk amid improving valuations and expectations of an acute supply deficit in Sydney and Brisbane post 2026. At the same time, astute buyers can acquire desirable properties on valuations they could only have dreamed about five years ago. Market strategist Jason Coggins* says there's little significant premium-grade new supply in the Sydney market, while the supply squeeze is likely to be even more evident in Brisbane in the lead-up to the Olympics. Will office follow retail? Coggins reckons the office sector is going through the same phase as retail assets five years ago, when mall owners sold on 'aggressively' high capitalisation (cap) rates that did not reflect replacement costs. Cap rates are the net operating rents derived from a property, as a percentage of the price paid for the asset. The higher the cap rate, the lower the price. 'The country is not built a major mall in more than 20 years and the population has gone from 20 to 28 million,' Coggins says. 'You will see that in some degree in office.' Macquarie Equities points to a gradual office recovery in the June quarter, with positive net absorption across all major cities. Net absorption means more space was taken up than vacated. Sydney performed most strongly during the quarter, but Melbourne improved the most over the last 12 months. 'We continue to advocate for a rotation into office based upon an anticipated gradual recovery in income fundamentals and stocks trading at deep discounts to book value,' the firm says. Sydney holds up 'remarkably well' Sydney has maintained its status as the most robust and liquid office market, especially in the CBD premium sub sector. For the record, that's the area within Circular Quay, Martin Place and George and Macquarie Streets. Coggins says transaction activity is increasing amid ongoing interest from Japanese, South Korean and Singaporean institutions. 'Sydney space trades at a premium because it's a highly deep and liquid market,' Coggins says. 'It's hard to get a good cheap deal.' He says when the Sydney Metro rail project started a decade ago, dozens of B grade buildings were razed. In the meantime, global companies demand A-grade space for their HQs and this space continues to trade on low cap rates. Coggins says A grade tenants are moving from locations such as North Sydney and Macquarie Park, into the CBD. Tenants are likely to crave premium space, with little visibility on new CBD projects beyond existing builds such as 55 Pitt Street and Charter Hall's Chifley stage two south tower. Two other key projects – 33 Alfred St and 121 Castlereagh St – have completed. … while Melbourne lags Down south, Melbourne's recovery still lags by about 12 months, with stubbornly high – but improving – vacancies. Agent Cushman & Wakefield says net effective premium rents rose 5.1% in the June quarter, but incentives (discounts and rent-free periods) remain at high levels. Coggins says the Melbourne downturn is skewed to out-of-favour 'campus style' developments in the Docklands precinct. Campus style doesn't refer to student digs, but low-rise buildings for a single corporate tenant and large amount of open space. Examples include Medibank headquarters and the National Australia Bank's Docklands office. Coggins says high incentives are a lagging indicator rather than a sign of things to come. … and 'Brizvegas' is set to boom again Cushman & Wakefield reports steady demand for Brisbane CBD office space in the June quarter, building on a strong December 2024 half. Once again, tenants favour premium and A-grade sectors, although net absorption moderated to -12,646 square metres. 'With several pre-committed supply additions due later in 2025, tenant movement is expected to lift in , particularly among larger occupiers seeking upgraded space,' the firm says. 'Overall, demand remains evident for high-quality and well-located assets in Brisbane's office market." This is "supported by rising effective rents and tightening vacancies". Buyers can still snare good deals, especially relative to the Sydney market. In a bellwether transaction, Sentinel Property Group acquired Green Square South in Fortitude Valley, for $132 million. The vendor was South Korea's Teachers Pension Fund. Tenanted by the Brisbane City Council – but only until 2027 – the property sold on a stratospheric 14% yield. 'Buyers in Brisbane get good prices because it is harder to sell assets and that extends to B-grade buildings, which are really hard to sell,' Coggins says. But as the Olympics loom, Coggins expects Brisbane to experience acute shortages of both office and retail property. The REIT way to invest Most retail investors access commercial property is by way of listed real estate investment trusts (REITs). These ranging in size from the $70 billion Goodman Group (ASX:GMG) (global industrial assets) to niche plays in convenience, rural assets, childcare and self-storage. The REITs most heavily exposed to office sector are Dexus (ASX:DXS), Mirvac (ASX:MGR), GPT Group (ASX:GPT) and the pure play Centuria Office REIT (ASX:COF). While valuations have improved, broker Morgans says office REITs trade at an average 24% to the value of their net tangible assts. Centuria Office trades at a 34% discount and the shares have lost 40% of their value since the pandemic's early days. Grounds for optimism The Reserve Bank of Australia held rates steady last month. But last week's surprisingly high unemployment number points to a cut at next month's meet. 'The forward yield curve has another two to three rate cuts prices in over six to 12 months and this will feed directly into valuations,' Coggins says. 'It also means the debt attached to these assets becomes cheaper and also supports valuations.' Property is also a bond 'proxy', in that investors will compare rental income yields with those from risk-free government bonds. Thus, lower bond yields make property look more attractive – and the reverse applies. The office story has a way to play out. ' While the office sector has seen improving fundamentals in recent months, high incentives and capital expenditure remain a headwind to net cashflow generation,' Citi says. 'We remain cautious on the subsector relative to retail, industrial, self-storage, residential and data centres.' Building optimism Coggins adds that as with Adelaide, Brisbane has higher occupancies because workers are less likely to work remotely. In Sydney and Melbourne, the CBD workforce is skewed to professions more likely work independently and remotely. 'Having said that, they tend to be prominent firms who want to showcase themselves in a premium location.' The working-from-home impact aside, Coggins notes that Australia is one of the urbanised countries in the world. 'People still need office space,' he says. 'In a world of geopolitical tension, investors typically view Australia as a safe haven.' *Jason Coggins holds multiple high-level advisory roles at leading fund managers, advice firms and family offices.
The Age
12-06-2025
- Business
- The Age
The collateral damage from Monash IVF's colossal embryo bungles
The next part of the script unusually involves activists calling for enhanced regulation or better laws. Advocates are also lobbying for all those who use assisted reproductive technology to have their babies DNA tested, which, if implemented, could uncover if other mistakes have gone undetected. And no scandal is complete without a politician or two making some hay by grabbing a microphone and castigating the culprits. Victorian Health Minister Mary-Anne Thomas was the first to step up this week, calling the embryo mix-up 'completely unacceptable'. 'It's very clear to me that the board of Monash IVF needs to have a very good look at what's going on,' Thomas said. Loading 'Clearly their clinical governance standards are not what they should be.' But amid the outrage there is another group that will also sustain collateral damage – the shareholders – although sympathy for this group will be way more muted. They have seen the share price of Monash IVF plunge after the first incident was revealed in April and after the company cut its 2025 full-year profit guidance by 11 per cent. It took another dive this week when the second implant bungle was revealed, taking this calendar year's stock performance down by 50 per cent. The shares kicked up by 5.7 per cent on Thursday on the news of the departing chief, but this represents a small recovery. Enter the investment bank analysts who use their sophisticated models to provide commentary on the impacts of these types of events on a company's market share and future earnings. In the case of Monash, their opinions run the gamut of possibilities. RBC Capital markets suggests that the fallout from the original bungle in Monash's Queensland clinic would confine the loss of market share to that state, and not impact too heavily on other state operations. But given there have now been two separate embryo transfer incidents in different states, it believes there is risk of a greater impact of a spread of reputational damage and market share losses. It has a negative stance on the stock. Macquarie Equities has a somewhat different view. It acknowledges the reputational damage, but says the stock is oversold and represents a good buying opportunity. You could characterise its advice as 'don't throw the baby out with the bathwater'.
Sydney Morning Herald
12-06-2025
- Business
- Sydney Morning Herald
The collateral damage from Monash IVF's colossal embryo bungles
The next part of the script unusually involves activists calling for enhanced regulation or better laws. Advocates are also lobbying for all those who use assisted reproductive technology to have their babies DNA tested, which, if implemented, could uncover if other mistakes have gone undetected. And no scandal is complete without a politician or two making some hay by grabbing a microphone and castigating the culprits. Victorian Health Minister Mary-Anne Thomas was the first to step up this week, calling the embryo mix-up 'completely unacceptable'. 'It's very clear to me that the board of Monash IVF needs to have a very good look at what's going on,' Thomas said. Loading 'Clearly their clinical governance standards are not what they should be.' But amid the outrage there is another group that will also sustain collateral damage – the shareholders – although sympathy for this group will be way more muted. They have seen the share price of Monash IVF plunge after the first incident was revealed in April and after the company cut its 2025 full-year profit guidance by 11 per cent. It took another dive this week when the second implant bungle was revealed, taking this calendar year's stock performance down by 50 per cent. The shares kicked up by 5.7 per cent on Thursday on the news of the departing chief, but this represents a small recovery. Enter the investment bank analysts who use their sophisticated models to provide commentary on the impacts of these types of events on a company's market share and future earnings. In the case of Monash, their opinions run the gamut of possibilities. RBC Capital markets suggests that the fallout from the original bungle in Monash's Queensland clinic would confine the loss of market share to that state, and not impact too heavily on other state operations. But given there have now been two separate embryo transfer incidents in different states, it believes there is risk of a greater impact of a spread of reputational damage and market share losses. It has a negative stance on the stock. Macquarie Equities has a somewhat different view. It acknowledges the reputational damage, but says the stock is oversold and represents a good buying opportunity. You could characterise its advice as 'don't throw the baby out with the bathwater'.
News.com.au
04-06-2025
- Business
- News.com.au
Health Check: Whether stoic or simply too poor, Australians spurn GP visits
Doctor visits dipped in April, reversing a recovery trend Mayne Pharma threatens to go legal in takeover dispute … but peace erupts at Cann Group with settlement of legal spat We're either a healthy lot, rely on Dr Google or simply can't afford to visit a GP anymore. Take your pick as to why our doctor visitations are running below the historic trend. Medicare data for April shows a resumption of a decline in doctors' visits, thus reversing a recent recovery. Bell Potter says the 12-month rolling rate slipped back to 0.8% from 2.3% in March and now is below the long-term median 1.4% growth. In April last year, the rolling rate had dipped to -3%. The slippage was most apparent in Queensland, which shows what stoic souls they are up north. Or maybe they couldn't get to their clinics because they were hemmed in by floods. The rate of doctors' visits has a direct impact on diagnostic imaging volumes and thus is relevant for stocks such as Sonic Healthcare (ASX:SHL), Integral Diagnostics (ASX:IDX), Healius (ASX:HLS) and Australian Clinical Labs (ASX:ACL). (Healius sold its 69 medical centres to private equity firm BGH Capital for $500 million in November 2020.) Macquarie Equities says both pathology and imaging volumes grew 4% in April, year on year. But the DI providers look to be protected by more expensive procedures – 'higher fee modalities', as the firm puts it – with benefits paid rising 8% in April for pathology and 7% for imaging. On the bright side, face-to-face GP visits have held up relative to telehealth and the former is likely to result in diagnostic referrals. So it's a bit of a mixed picture. The re-elected Albo's pledge to extend bulk billing might also ramp up volumes. What will restrain the pain at Mayne? Mayne Pharma's (ASX:MYX) takeover is in the balance, with a 10-day consultation period expiring without suitor Cosette Pharmaceuticals pulling the plug. Cosette alleged that events had resulted in a 'material adverse change', thus triggering the consultation period. Mayne denies these events were material. The FDA has accused Mayne Pharma of downplaying the risks of its oral birth control pill, Nextstellis. Mayne Pharma now says the agency is satisfied the company has addressed the identified issues. Mayne is also in a tat-for-tat legal dispute with the Nasdaq-listed Therapeutics MD, relating to Mayne's purchase of assets from the latter in 2022. While Cosette is yet to walk, the terms of the scheme implementation deed (SID) enable the suitor to do so any time up to the second court hearing to approve the deal. The affair may end up in the courts in a different way, given Mayne 'intends to take all reasonable steps to enforce its rights under the SID.' This includes litigation, of course. Mayne shares this morning surged 5%, but they remain 32% below Cosette's $7.40 a share cash offer. So investors are saying the deal might have a pulse, but not at the original offer price. Cann Group pots legal settlement Medical cannabis play Cann Group (ASX:CAN) has settled a legal dispute with the NZ-listed Rua Biosciences, which had sued a Cann subsidiary over a manufacturing and supply agreement. As is the norm, the agreement is confidential but doesn't involve any money changing hands. Instead, the parties have agreed that Cann will supply 'certain medicinal cannabis products' to Rua under 'agreed market standard commercial terms.' As far as legal spats go, it sounds like a reasonable result. Across the Tasman, Rua shares were up more than 7% this morning Cann shares were about 3% off the pace, having lost 65% of their value year to date. The first Australian company to receive an Australian cannabis research and cultivation licence, Cann produces from its modern Mildura facility. But in the current oversupplied market, it's not easy being green. Radiopharm tackles HER-2 cancers Radiopharm Theranostics (ASX:RAD) has dosed the first patient in its phase I trial to treat advanced HER2-positive solid tumours. A human epidermal growth factor receptor, HER2 is expressed in a variety of tumours including some breast cancers. Dubbed Heat, the study road tests Radiopharm's lutetium isotope-based therapy. Taking place at multiple local centres, the study has the usual safety and tolerability remits. It also aims for the optimal dosage for a phase II trial, as well as early efficacy signals. 'Despite progressive improvements in the management of metastatic HER2-positive disease, the majority of patients experience disease progression on current standard of care and require further therapeutic options,' Radiopharm CEO Riccardo Canevari says. On Monday, the company said preclinical data from another program showed 'favorable biodistribution and ... maintained tumor uptake.' This one refers to its lutetium-based monoclonal antibody RV01, which targets solid tumours expressing the B7H3 protein. This one is via a joint venture with Houston's MD Anderson Cancer Center to develop at least four radiopharmaceutical products. The next step is FDA assent to run a first-in-human trial, which the company hopes to kick off in 2026.
