This article is from the Australian Property Journal archive
RETIREMENT living operator Aveo (ASX: AOG) is counting down to a shareholder vote on the proposed takeover by Canadian giant Brookfield, as the weakened residential market took the group to a $213.4 million annual loss.
The board reaffirmed its support of Brookfield’s $1.27 billion acquisition bid which entitles to $2.195 cash per security, inclusive of the 2019 full year distribution of 4.5 cps.
The bid represents 28% premium to Aveo’s closing price of $1.71 on the day before updating the market in February that it had received a number of indicative non-binding bids from interested parties. Shareholders will vote in November.
Underlying profit after tax was slashed to $50.1 million, down from $127.2 million. Net profit last year was $365 million.
The statutory result was impacted by a $259.3 million dent in the investment property portfolio valuation, following a review of its unit pricing and the adoption of lower property price growth assumptions reflective of the downturn in the residential market.
This resulted in a decrease in net tangible assets per security from $3.92 to $3.50.
Funds from operations fell from $115.4 million to $44.4 million.
“Our retirement business continued to encounter a tough trading environment in FY19 with sustained weakness across residential property markets in Australia,” chief executive officer, Geoff Grady said.
“This weakness adversely impacted settlements achieved on our retirement properties as incoming residents were delayed in selling their homes to complete settlement.”
Total retirement revenue over FY19 decreased by 23% in FY19 to $462.0 million, on the back of lower resales and lower sales volumes of minor development stock. Total retirement settlement volumes was 901 units, down 7%, and below the 1,140 units sold over the year. Major development deliveries fell 17%, with 419 new units delivered at ten sites across Queensland, New South Wales, Victoria and Tasmania.
Early in 2017, Aveo was the subject was a damning investigation by Fairfax and the ABC that exposed excessive fees and questionable regulations practices, and in August appointed Merrill Lynch as financial advisor for a strategic review of its retirement portfolio and operations.
