This article is from the Australian Property Journal archive
Massive growth of its funds base has seen Centro Properties Group yesterday announce record first half earnings of $162.8 million for the half year ended December 31, 2006 ? up some 15.2% on the previous corresponding period.
Overall, Centro saw its property securities income climb a massive 133% from just $33.1 million in the first half of 2005 to $79.3 million to December 2006.
A slight downside for the group was income from Centro’s local property investments fell 5.4% to $82.3 million in the first half, however, the local market remains the group’s main source of income.
Centro has been the highest performing Australian listed property trust over the past 10 years, with investors having received an average total return of 27% per annum for each of these 10 years.
The Victorian based property group believes the results were achieved by Centro’s “strong underlying property growth” and the benefits of its “cemented co-investment business model”, which included last year’s acquisition of the US listed $3.2 billion Heritage Property Investment Trust.
According to Centro chief executive Andrew Scott, this acquisition, in particular, justified the establishment of new unlisted funds, contributing to the significant sustainable growth in funds management revenue.
“The combination of continuing investor demand for direct retail property and Centro’s established and broad equity distribution channels, including financial advisers, authorised representatives and the superannuation fund administration platforms, has resulted in $277 million of inflows into Centro funds in FY07 to date,” Scott added.
“Centro’s capacity to complete a major acquisition, such as Heritage, continues to develop and has been successfully demonstrated during the half year.”
He said the resulting launch of new funds including the Centro Australia Wholesale Fund and Centro America Fund are exciting opportunities for Centro to further access the wholesale investor and self-managed superannuation fund markets – markets that show strong increases in demand for investments into well managed, direct property funds.
Centro’s strong long-term track record of distribution growth and returns has continued with an 8.4% DPS growth for the half year and a 32.7% growth in overall distributions to $1.133 per security for calendar year 2006 compared to prior 2005 year when taking into account the $0.75 special distribution in November 2006 and $0.50 Centro Retail Trust capital return in August 2005.
Centro investors achieved a 66% total return for the 2006 calendar year.
Centro chairman Brian Healey added with the 35.7% growth in Centro’s funds under management largely resulting from the Heritage acquisition, Centro launched new unlisted co-investment funds totalling $6.1 billion in response to investors’ increasing appetite for quality retail property investments for their growing superannuation savings.”
Healey noted that Centro is well on track to achieve its sustainable earnings growth guidance of at least 7% per annum through retail property earnings growth, underlying Services Business growth and continuing economies of scale,” Healey added.
Scott concluded that Centro has investments of $3.7 billion in its managed funds, invested in the DPF, DPFI, CAWF, CAF and new Centro MCS Syndicates.
“These investments comprise $1.8 billion of investment into Centro’s diversified funds, seen as long term “core investments” and $1.9 billion of investment into Centro’s managed funds, which are seen as “flexible investments”, based on investor demand and Centro’s need to recycle equity for further asset investments.
Centro managed funds delivered excellent total returns for 2006 with the listed Centro Retail Trust achieving a 44.1% total return, the Direct Property Fund 18.4%, the Direct Property Fund International 11.9% and an average 21.2% for the Centro MCS Syndicates.
Centro Retail Trust also has reported a profit of $33.4 million for the half year to December 31, 2006 – up 45% over the previous corresponding period.
Healey said the retail shopping centres portfolio has performed extremely well over the period and is benefiting from the completion of 10 of the developments identified at CER’s listing in August 2005.
The distribution for the six months ended 31 December 2006 of 6.3 cents per security will be paid on 27 February 2007 to investors registered as at 31 December 2006.
Meanwhile, Centro has transferred its $472 million ownership interest in Centro Retail Trust to the Centro Direct Property Fund and the Centro Direct Property Fund International.
Australian Property Journal
