Economists at Citi remain optimistic about the strategy of Australian property manager BWP Trust (ASX:BWP) to keep reinvesting in assets that provide higher returns.

Earlier this week, BWP announced its decision to divest from property in Wollongong, Australia for A$40 million.

Citi approximates the sale at a capitalization rate of about 5.4%, matching the rate that BWP had disclosed during June ‘23 results.

The gains from this divestiture, along with other acquisitions, are expected to support the company in meeting the costs of additional acquisitions, numerous improvements, and redevelopment – as per Citi.

Although BWP’s lending practices seem relatively cautious in comparison to its competition, it has managed to maintain stability when compared to its own previous reporting period, the brokerage notes.

BWP’s shares have struggled this year, witnessing a 13% dip, according to numbers available until the last closure of the market.

BWP Trust (ASX:BWP) is a company which manages large-scale commercial properties across Australia.