This article is from the Australian Property Journal archive
SCENTRE Group is looking to increase its investment in Carindale Property Trust in light of current market conditions.
Scentre reported funds from operations of $1.199 billion, up 3.8% as forecast or 22.58 cents per security and distribution of 20.9 cents per security for the 12 months to December 31.
FFO growth would have been approximately 5% before the impact of these asset sales. The full year distribution of 20.9 cents per security is in line with forecast.
Chairman Frank Lowy said the rationale for the creation of Scentre Group has been validated with the strong results.
“Scentre Group’s pre-eminent portfolio and unique market position have provided a strong operating performance and excellent returns for security-holders since the Group was established as a separate entity,” he added.
CEO Peter Allen said the result highlights the quality of the portfolio and the benefits of having the right retail mix.
Comparable specialty sales in the Australian portfolio grew 5.3% for the 12 months, with average annual specialty sales of $10,826 per sqm (psm). Strong sales performance was seen across most categories, with good increases in the fashion, footwear, jewellery, leisure, health and beauty, technology and cinemas categories.
Average annual specialty retail sales in New Zealand increased to NZ$12,117 psm, representing comparable specialty sales growth of 6.6% for the year.
Comparable property net operating income increased 2.6% for the 12 months, higher than the forecast range of 2.0 – 2.5%, reflecting lower vacancies and additional income streams.
Meanwhile Allen said in the near term, Scentre intends to increase its investment in Carindale Property Trust. Although he stopped stop short of mentioning a takeover.
“Any future acquisitions of CDP units would be subject to prevailing market conditions and governed by the “creep provisions” of the Corporations Act.
“Scentre Group considers that the acquisition of further units in CDP, particularly in the current market environment, represents an attractive investment opportunity,” Allen said.
Scentre’s shopping centre assets saw significant revaluations of $1.5 billion during the year. The value increase was driven by growth in underlying income, the completion of developments and a firming of capitalisation rates across the portfolio. The portfolio weighted average capitalisation rate reduced by 38 bp during 2015 to 5.57% reflecting the quality of the centres.
At 31 December 2015, the total assets was $31.8 billion with a gearing ratio of 33.3% and liquidity of $3.7 billion.
The group forecasts FFO growth for the 12 months ending 31 December 2016 of approximately 3% and growth in distribution for 2016 of 2% to 21.3 cents per security. This represents an underlying FFO increase of approximately 5% excluding the impact of the sale of centres in Australia and New Zealand.
Carindale Property Trust also announced results, posting a half-year FFO of $13.9 million, an increase of 16.6% on the previous corresponding period. The statutory profit was $15.3 million (2014: $27.3 million).
The increase in FFO was as a result of the growth in net operating income of 3.5% and net financing costs 18.1% lower as a result of the refinancing of the bank facility and lower interest rates.
As at 31 December 2015, the centre was in excess of 99.5% leased with retail sales of $914.6 million for the 12 months. Specialty retail sales were $11,041 per sqm.
The centre was valued as of 31 December 2015 at $1,535.2 million (CDP share
$767.6 million). Net property income of $21.2 million (2014: $20.5 million).
The distribution was 19.60 cents per unit.
The trust maintains its forecast FFO and distribution per unit growth of 12-14% for the year ending 30 June 2016.
Australian Property Journal
