Blackwall Property Funds: A microcap property play

Apologies for my long hiatus, it has been hard to find interesting, reasonably valued stocks. Blackwall Property Funds (BWF) manage and service ~$600m of properties for various property vehicles. What’s exciting is they are in the early rollout phase of their shared office product ‘WOTSO Workspaces’. The strategy is to utilise BWF's balance sheet to buy, fit out and lease the property, then look to sell the property. Part of the strategy is the retention of management rights by BWF. Recurring revenue from management rights has increased materially with this strategy. Scale benefits are now also starting. Management believes the WOTSO product has significant scope for growth. Strip out cash & investments and you get a property management company with good recurring revenue growth on a very attractive P/E. BWF has a market cap of $21m at a share price of $0.40, zero debt, $3m cash and investments of $11.9m. I estimate a fully franked yield of 9.25% in FY16. Coupled with a buyback and an attractive yield, it’s interesting.