Morgans: Property sector plays

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After a stellar run in 2014, the property sector continues to perform as it delivers a total return of around 7.5% over the past quarter (versus the broader market total return of around 8.3%). Key drivers of the performance remain in place with the ongoing low interest rate environment, the search for yield and Mergers & Acquisition (M&A) activity, which we expect to continue in 2015. Our preferred retail exposure remains Federation Centres (FDC) which we recently added to our High Conviction list (VIEW LINK) following the announcement that it proposes to merge with Novion Property Group. The new merged entity will be a top 30 stock with a market cap of around $11 billion and the third largest REIT with $22 billion of assets under management. Given the increased size and scale we expect the merged group will become meaningful for both offshore and domestic investors. The deal is expected to be highly accretive and we expect it will deliver a yield of around 6%. Vist the Morgans Blog for all our preferred stocks in the property sector: (VIEW LINK)


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