This article is from the Australian Property Journal archive
PHILEO Australia (ASX: PHI) has decided to hold onto its flagship investment, 303 Collins St in Melbourne's CBD, following a review.
Phileo had classified the property as an inventory and considered offloading the asset after experiencing high vacancy rates following the departure of its major tenant, IOOF, which had occupied 9 floors in the 30-level building. Phileo bought the asset from Charter Hall for $56 million in 2009.
However in the first half of the 2013 financial year, Phileo has reclassified the building as an investment property.
Phileo’s managing director Rudy Koh said the company has recently reviewed the intended use of each property and in light of the current economic climate, it has decided to hold onto the property for rental income, consolidate its tenancies, and improve the building for capital appreciation in the longer term.
“There is no intention or commitment to sell the property in foreseeable future,” he added.
Phileo reported a profit after tax of $9.27 million in the 1H13 compared to a profit of $532,000 in the previous corresponding period.
However no interim dividend will be paid, the same as the first half of 2011.
Meanwhile revenue from rental of $4,656,000 was mainly from the commercial office property at 303 Collins St Melbourne CBD down from $5,799,000. The decrease in overall occupancy rate resulted in lower rental income compared to prior period.
Hotel operation generated $1,429,000 in revenue during the period (2011: $1,414,000). The hotel operations contributed $184,000 to profits during this period (2011: $281,000 profit). The decrease in profitability is mainly due to increase in the operating cost.
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