Question: I have an APN Property A-REIT code APF01 in my SMSF. It is paying a monthly yield of about 6% but the share has dropped from about $1.90 to $1.70 in last few months. I would like your view on the outlook for this fund. Is it time to sell down? And your option on the general property A-REIT area – has it run out of steam?

Answer (by Paul Rickard): This is an unlisted fund that purchases listed property securities.

All property securities have come off due to higher bond yields.

I expect this to continue, driven by the US Fed Reserve raising rates in December. Also, most property funds are trading well above their NTA.

I think property trusts will underperform relative to the broader market, and on this basis, would be lightening my holdings in these securities.

Question: Would you recommend buying shares in Sonic Healthcare (SHL)?

Answer (by Paul Rickard): No, I wouldn’t recommend buying Sonic.

I quite like the stock and momentum has been quite strong, but regulatory risk remains.

According to FNArena, it is trading on a multiple of 20.1 times FY17 earnings, 18.7 FY18 earnings, forecast yield of 3.6%.

Consensus target price is $21.83 – just a few cents from the current price.

Bottom line – I can’t get too excited about the stock.

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