This article is from the Australian Property Journal archive
FKP Property Group is expected to deliver at least a 50% fall in interim profits as well as write down $150 million to $160 million.
In a market update, FKP said it expects to report a first half operating profit after tax of approximately $35 million – compared to $72.9 million in the previous corresponding period.
FKP said its first half operating result stems almost exclusively from recurring income streams – property investment and funds management and the retirement portfolio, which is the largest in Australia.
The group said the development and land businesses have made a negligible contribution, after overheads, reflecting the difficult market conditions and the timing of project delivery.
FKP also expects to write down and book impairment charges to the tune of $150 million to $160 million.
The investment property business, namely FKP Core Plus Fund, FKP Core Plus Fund Two and FKP Property Trust are expected to write down $25 million.
Whilst property transactions in the aged care and retirement sector have been scarce, FKP said it revalued its assets to reflect an easing of the discount rate, and currently expects to value the portfolio on a discount rate of 12% (June 2008 11.5%). This would result in a non-operating charge of approximately $45 million to $50 million.
FKP’s retirement investment in RVG in New Zealand is expected to book an impairment charge of approximately $20 million.
And the development and land division assets is anticipated to write down $50 million to $55 million.
A number of FKP’s banking facilities are due to mature in the second half of the 2009 calendar year and the group is in extended negotiations because of the number of different facilities and banks involved.
FKP did raise a little hope yesterday, it said the results for the second half are likely to be stronger, given the SL8 medium density project in Brisbane’s West End is due for completion during that time, and a number of development and bulk land sales are under negotiation.
FKP is expected to deliver its interim result on February 26.
Australian Property Journal
