Written

For

The

Australian

-

Sharemarket

bargain

hunters

see

opportunities

in

private

credit

and

property

trusts

What if the best opportunities in this tariff-driven sell-off aren't in the beaten-up big names everyone is watching, but in two sectors most retail investors barely understand?

Private credit funds and real estate investment trusts have been dumped harder than they deserve in the recent market turbulence, and I think that spells opportunity for long-term investors willing to look past the noise.

Take GDI Property Group. It's paying an 8 per cent dividend and owns 18 commercial properties, mostly Perth office buildings. The company's stated net tangible assets are $1.19 per share, yet it's trading at just 62 cents. That's a 48 per cent discount to what shareholders would receive if the assets were simply sold off. The REIT sector is full of these situations right now.

Two tailwinds make property trusts particularly interesting. Most REITs are 30-40 per cent leveraged, so falling interest rates directly reduce their financing costs. And as cash and bond yields drop, income-seeking investors will start rotating back into REITs for their reliable distributions.

Private credit tells a similar story. KKR Credit Income Fund trades at an 11 per cent discount to NTA. Metrics Income Opportunities Trust (MOT) is 15 per cent below NTA. As Andrew Lockhart from Metrics points out, debt sits higher in the capital structure than equity — lenders have covenants and protections that equity holders don't. Getting that lower-risk exposure at a discount is unusual.

Tim Canham at Balmoral Investors also flagged some small caps worth a look. Cedar Woods (CWP) is a residential developer trading 15-20 per cent below NTA on a P/E of 8-9 with a 5 per cent yield. As Tim rightly noted — you can't import or export land, so tariffs are largely irrelevant. Amplitude Energy (AEL) is another he likes after a 25 per cent drop.

Volatility creates mispricing. And mispricing creates opportunity.