This article is from the Australian Property Journal archive
LARGE format player Aventus Retail Property Fund has revised its full-year guidance following the strategic divestment of Shepparton and Tweed assets.
It posted 3.4% increase in funds from operations to $45 million for the first half, or 9.1 cents per unit, and up by 28.6% on the previous corresponding period. Revenue was up by 28.3%.
The group settled on its sector-record $436 million acquisition of the Castle Hill and Marsden Park Home Hub centres, and it sold the Shepparton Home and Tweed Hub late last year at a weighted yield of 7.42% in December. It suggested then that income growth for the full year would be at the lower end of the then-forecast of between 2% and 4%, which has now been reduced to 2% and 3%.
Aventus Property Group chief executive officer, Darren Holland, said the centres were sold at a 6.5% premium to combined book value, “leading to an improvement in the quality of the portfolio, with the average centre increasing to $93 million”.
“We have strategically improved the quality of the portfolio by acquiring dominant centres at Castle Hill and Marsden Park and through the divestment of smaller centres at Shepparton and Tweed, with total value of total capital transactions of approximately $500 million for the half.
“Our commitment to actively improving the portfolio, along with a focus on growing the development pipeline will continue to drive investor returns and long term growth. We will continue to explore opportunities to take advantage of a fragmented ownership sector,” Holland said.
The group’s portfolio value is now at $1.85 billion, with gearing down from 38.9% to 36.9%, and the portfolio cap rate tightened from 6.85% to 6.59%. Net tangible assets increased by 5.4% to $2.34 per unit.
Holland also said the portfolio was well positioned to capture the impacts of population and economic growth, with 92% of the portfolio by value located in the eastern states, and mostly in metropolitan locations.
Occupancy was up slightly to 98.6%, and the 46 leasing deals secured over the half covered 38,000 sqm.
Aventus has diversified its portfolio tenancy mix to include around 37% non-household good tenants by income, including “food, health and wellbeing, services and childcare which contribute to weekday traffic and improve customer linger time”.
It said that figure is 34% by gross lettable area, compared to the broader sector average 27%.
A new report from BIS Oxford Economics suggested the versatility of large format centres and increased consumer spending will bring greater returns for landlords compared to shopping centres over the next decade.
The study’s author, BIS Oxford Economics senior project manager Maria Lee, said “the broadening of tenant mix not only improves visitation across the week but also helps keep a lid on vacancies. Importantly, these tenants often pay a higher rent than the traditional large format tenants.”
Australian Property Journal
