This article is from the Australian Property Journal archive
ABACUS Property Group is bullish about its diversified strategy generating continued growth in shareholder returns after posting record results for the 2017 financial year.
Its underlying profit surged upwards by 51% to $186.8 million, and its consolidated statutory profit by 53% to $285.1 million with positive contributions from each of its commercial and self-storage segments.
Underlying earnings per security jumped by 46% to 32.7c and distribution per security by 3% to 17.5cps.
“The business outlook remains positive with expected growth in our recurring earnings base, which provides scope to deliver on our stated distribution policy to grow distributions per security at c.2-3%pa for securityholders,” Abacus managing director, Frank Wolf said.
Abacus is targeting a distribution of 18.0 cps for FY18, a 3% increase on FY17 DPS.
“We see our distribution growth as sustainable and stable despite any fluctuations in earnings per security due to higher or lower levels of transactional profits,” Wolf said. “While the financial results are strong we are also proud of delivering so successfully via our diversified core plus strategy. This continues to highlight our ability to grow returns across our business as we move through the differing cycles of each business sector.”
The group’s commercial portfolio contribution doubled to $133.7 million of underlying EBITDA over the year, underpinned by increased rental income, with like-for-like rental growth of 2.7%, and $50 million in profits from asset sales.
Its total value grew to more than $1.2 billion following the addition seven assets worth $200 million over the year, including a stakes of 50% and 67% in Brisbane commercial buildings 324 Queen Street and 444 Queen Street respectively, and a half-share in Adelaide’s Westpac House. It also achieved revaluation gains of $48.2 million, and sold off four assets worth $160 million, which included its stake in the World Trade Centre office tower in Melbourne and a Browns Road industrial site in Clayton.
Occupancy is at 90.5%, cap rate at 6.7% and WALE 4.1 years. Wolf said the retail portfolio was now showing returns on redevelopment and refurbishments.
Third-party capital joint ventures have now invested in more than $1.3 billion.
Its self-storage portfolio made an underlying EBITDA contribution of $43.7 million, up by 13.6%, with rental growth of 13.6% that took average rent to $262 per sqm and revenue per available sqm up 3.1% to $234 per sqm. Occupancy is at 89.2%.
Four new assets of $22.0 million took portfolio NLA to 302,000 sqm, across 65 assets valued at $629 million.
Wolf said the group is looking for further conversion opportunities in metropolitan areas on the eastern seaboard. It currently holds five non-storage assets offering a conversion potential of 16,000 sqm of NLA.
The property developments business brought in EBITDA of $55.0 million, slightly down from last year, and total assets down by $51 million to $448 million, due to a $135 million reduction of capital and interest repayments received. However, project realisations and receipt of interest payments returned more than $170 million of cash, in excess of its $125 million target.
It has 9,500 units or land lots have a cost base of $47,000 per unit/lot. Wold said this provided comfort that the group’s exposure to residential markets – with a 90% exposure to Sydney by lot and 77% by capital investment – “should continue to deliver strong returns in the future”.
The group’s total net tangible assets was up 13.5% to $3.02 per security, and group gearing was at a conservative 20.5%.
Australian Property Journal
