This article is from the Australian Property Journal archive
POSITIVE contributions from its funds management platform and development activities have allowed Folkestone to post a small net profit after tax increase of 2.3% to $3.25 million.
Managing director Greg Paramor said Folkestone has a number of transactions underway that would contribute to earnings in the second half of the 2017 financial year.
Statutory NPAT was up 6.0% to $3.19 million, and statutory earnings up 5.6% to 2.2cps. EBITDA was up 1.3% to $5.07 million, and revenues from ordinary activities spiked 219% to $21.023 million.
Over the half, funds under management increased 12.6% to $1.2 billion, which reflected a 23% uplift on the prior corresponding period.
Total funds management revenue dipped by 0.3% to $7.5 million, with last year’s figure boosted by a $1.6 million performance fee.
Recurring fee income and cost recoveries increases by 20.6%; transaction fees jumped by 138.5% to $1.4 million, and distributions from the its co-investment in the Folkestone Education Trust grew 1.5% to $2.2 million.
The Trust, the largest fund managed by Folkestone, increased gross assets to $829.1 million, an increase of 10.0% in the half and 17.0% over the year.
The trust acquired two new centres and six development sites for new centres. Five-year options were taken up at 39 centres and market rent reviews completed at 64, resulting in an average increase of 4.9%. The trust’s distribution was up 7.0% to 6.0cps.
The group marked its entry into the senior living sector with the establishment of the Folkestone Seniors Living Fund No. 1 to acquire the Watermark Castle Cove retirement living community on Sydney’s lower North Shore.
“Our entry into the seniors living sector is an extension of our strategy to expand our real estate related social infrastructure platform. Australia’s ageing demographic and growing recognition of seniors living communities as a lifestyle choice will underpin demand in this sector going forward,” Paramor said.
Folkestone’s development division returned a net development profit increase 8.1% to $2.8 million.
“We continue to secure strong pre-sales across our active residential and enterprise park developments. In particular, our residential land projects continue to perform well,” Paramor said.
“This is exemplified by the strong pre-sales recorded at Folkestone’s newest residential development, Amber at Wollert, which launched in November 2016 in Melbourne’s northern growth corridor. The project, being undertaken in joint venture with ID_Land, was launched in November 2016 and as at 31 December 2016, 65 pre-sales had been achieved, with a further 50 pre-sales achieved to 27 February 2017. Our two residential developments in Officer, in Melbourne’s south-east are now sold out, while our residential land subdivision at Truganina in Melbourne’s western growth corridor has captured almost twice the budgeted sales since launching in November 2015,” he added.
Folkestone entered into a joint venture with Furnished Property to develop a circa-142 room hotel at Green Square, Sydney in November.
Paramor said Folkestone’s interests in the Wollert residential land subdivision and the Green Square hotel development are being warehoused on its balance sheet, with the intention to sell down part of its interests into two new funds that are expected to be launched in the second half of FY17.
“This is consistent with our strategy to secure quality investment opportunities that can be later sold down to Folkestone managed funds,” he continued.
The group has $11.8 million in cash reserves and an undrawn facility of $12.5 million.
Net asset value fell 2.3% over the half to 96.7cps, net tangible asset backing was down to 91.6cps, and gearing was up from 4.2% to 8.7%.
Paramor said the primary reason for the drop in NAV and NTA was a 4.9% decline in the value of its 12.3% holding in the Folkestone Education Trust, which as a listed entity is marked to market at each reporting date.
Folkestone reaffirmed its full-year guidance of 2.62cps.
Australian Property Journal
