This article is from the Australian Property Journal archive
A STRONG performance from residential developments and commercial investments helped Abacus Property Group deliver a first half-year underlying profit of $69.5 million, up 22% from the HY16.
The group’s consolidated AIFRS statutory profit increased 2.5 times to $191.7 million from $75.5 million in HY16. Abacus announced a HY17 distribution per security of 8.75 cents up 2.9%.
Managing director Frank Wolf said the business continues to perform very well.
In the first half year, Abacus realised over $80 million in cash from residential developments.
“We continue to see reward for our diversified multi-platform business with strong contributions to both underlying profit and NTA from all sides of the business. Increased recurring and transactional contributions to underlying profit from our commercial and storage portfolios offset a slight reduction in the quantum of profits from our development projects due to the timing of development realisations after a strong HY16,” he added.
The commercial portfolio added two assets for $90 million while also achieving revaluation gains of over $64 million. These helped increase the portfolio’s total assets to almost $1.1 billion across 34 properties.
Underlying EBITDA increased 79% to $50.0 million driven by improved net rental income and strong transactional profits following the sale of two assets for $100 million that delivered $11 million in gains. Occupancy fell slightly to 90.4% from 91.2% at 30 June 2016.
The self-storage portfolio delivered $19.0 million underlying EBITDA contribution, up 19.5%. Business trading continues to improve, delivering rental growth of 17.0% for the period over the prior corresponding period.
The property ventures division generated an underlying EBITDA result of $24.5 million for the period. This was slightly down on last year’s result for the same period attributable to a lower average interest rate across the portfolio and a reduction in fee income from new investments.
Project realisations and the receipt of interest payments during the period delivered over $80 million of cash to the business. The Abacus property ventures portfolio comprises over 9,000 units or land lots which equates to a cost base of c$50,000 per unit/land lot.
The funds management business generated an underlying EBITDA result of $5.8 million for the period.
Wolf said the group remained committed to the core plus value add strategy.
“The business outlook remains positive with a strong balance sheet of opportunities, a current cost base suggesting strong intrinsic value that is set to deliver identifiable short and medium term returns and other assets that present real long term potential.
“Capital has been invested over the last few years to provide an appropriate rate of return throughout the cycle. As cycles transition over the coming years, our investment strategies will transition in line, with an increased investment allocated to self storage and investment properties to grow recurring earnings which will support growth in distributions. This transition will be funded from realisations across our funds management and residential development sectors as projects are completed.
“We will look to expand our property investments utilising our third party capital platform as well as wholly on balance sheet,” he added.
Abacus is targeting a distribution of 17.5 cps for FY17, a 2.9% increase on FY16 distributions per security.
Australian Property Journal
