This article is from the Australian Property Journal archive
Diversified property trust JF Meridian Trust has delivered a net profit of $106.9 million for the year ended June 30, 2006 – an increase of 11.8% over last year.
JFM had undistributed income was $109.1 million, up 58.1% over last year underpinned by strong revenue of $160.2 million.
At June 30, 2006, the trust maintained its direct property sector and geographic weightings generally in line with its strategic allocation of 35-40% for retail and commercial and 10-15% for industrial and hotels.
During the 12 months, JFM’s gross assets increased by 18.4% from $923 million to $1.1 billion – bolstered by revaluations gains on 17 assets (excluding hotels), which resulted in an uplift of $39.4 million or 5.9% on book value. The trust has a high portfolio occupancy rate of 98.6%, up from 96.9% in June 2005, following 35,876 sqm being leased across the portfolio.
“The valuation increases were driven by active property leasing, enhanced cash flow security, pursuit of value adding opportunities and continuing compression of investment yields throughout most property markets around Australia,” JFM’s director Andrew Butler said.
He added that office market conditions in the Brisbane CBD and fringe are very buoyant.
JFM’s offices delivered EBIT of $28.5 million for the year.
“Melbourne is solid and we expect Sydney to gain further momentum over the next 12 months. The portfolio is well placed to benefit from the improving Brisbane and Sydney office markets,” he added.
Meanwhile, the retail portfolio continued to achieve strong growth, with moving annual turnover up by 8.1% on the previous year to $441 million and EBIT of $21.7 million.
“Our focus will be to successfully deliver JFM’s existing retail development pipeline of approximately $150 million over the next few years,” he added.
The trust’s industrial and business park portfolio improved significantly through an active acquisition and disposal program during the year. The portfolio posted EBIT of $11 million.
The occupancy level of the industrial and business park portfolio improved to 99.6% up from 96.4% at June 2005, and the average lease expiry increased to 5.5 years from 4 years.
Butler said in the coming year, JFM will continue to look for industrial opportunities that have long-term leases and are well located in terms of infrastructure and transport with a focus on Sydney, Brisbane and Melbourne.
During the year, the trust’s Travelodge hotel portfolio was expanded to 12 hotels and 1,945 rooms, including acquisitions in the high growth states of Western Australia and Queensland.
Meanwhile, JFM has agreed with Leighton Properties (VIC) Pty Ltd not to proceed with the proposed acquisition of the Tooronga Homemaker Centre development.
Looking ahead, Butler said a strong balance sheet, with low gearing, will enable the trust to quickly pursue opportunities across all sectors.
At June 30, 2006, the trust’s total borrowings were $289 million, representing a gearing ratio of 26.6%, one of the most conservative gearing ratios of any listed property trust (LPT sector average for gearing is 38.1%).
“The synergies arising from our alliance with Mirvac also bring considerable benefits through our combined expertise and a broader operating platform. We will continue to foster opportunities with Mirvac both through joint ventures and as end purchaser, further strengthening our position as a leading diversified property trust,” he added.
JFM’s earnings per unit were 17.45 cents per unit compared to 19.05 cents per unit in the previous year. Underlying core earnings were 10.2 cents per unit and the distribution was 10.3 cents per unit.
By Kathryn O’Meara
