Real Estate Giant Australian Unity Shares Progress Over Parramatta Property

Real Estate Giant Australian Unity Shares Progress Over Parramatta Property

Australian Unity Office Fund (ASX: AOF) is a real estate company located in Melbourne, Australia. The company has a portfolio of nine office properties located across the Australia.

Today, Australian Unity Investment Real Estate Limited (AUIREL) announced AOF’s achievement of a milestone relating to AOF’s proposed development at 2 Valentine Ave, Parramatta. AOF will be forwarding the Site-Specific Planning Proposal to the NSW Government Department of Planning and Environment for the determination of its Gateway.

Earlier, the City of Parramatta Council had provided a development consent for an area of about 8,000 square meters of commercial office property. On 17 December 2018, the Council endorsed AUIREL’s Site-Specific Planning Proposal to change Parramatta Local Environmental Plan by removing the height limit and floor-to-space ratio, or density, requirements that apply to the site. This endorsement will be marked as an achievement of a new milestone in a series of events before the commencement of its proposed commercial office building of approximately a total area of 28,000 square meters.

In addition to this development approval process, the management is continuing its efforts to seek approval for the proposed development and is in advanced discussions with several tenants regarding leasing a part or all of the proposed development.

On 3 December 2018, the AUIREL appointed Mr. Mark Lumby as AOF’s Fund Manager. Mr. Lumby would currently be the head of commercial property with an experience of 10 years with AOF and total experience of over 20 years.

On 8 October 2018, AUIREL received an unsolicited, indicative and non-binding proposal from Starwood Capital Asia Limited to acquire all the issued units of AOF for $2.95 cash per AOF unit which was revised to $2.87 cash per AOF unit reflected in the revised proposal sent on 24 November 2018. The reduction of 7.9 cents per unit was due to the assumption of the transaction to be implemented post 31 March 2019.

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But on 28 November 2018, the independent board committee (IBC) formed by AUIREL recommended the board, after the consideration of the revised proposal of Starwood, to reject the proposal as it did not represent compelling value for AOR unitholders.

The company declared its FY18 earnings on 26 September 2018 with Funds from Operations (FFO) reported at 17.2 cents an increase of 0.1 cents as per FY17 results. An increase in Net Tangible Assets (NTA) by 0.44 cents to $2.67 per unit, and a Total Return to Shareholders of 26.7% was reported. The portfolio value was reported at $6.356 billion with a WACC of 6.5%. The overall Gearing increased to 30.2% with a positive change of 3.2%, and the interest coverage ratio declined by 1.4x, now reported at 5.05x. The statutory net profit was reported at $97.3 million as compared to $60.6 million in FY17.

Over the past one year, the scrip price has soared by 43 cents or 18.61%. The price was $2.31 at the close on 2 January 2018, and today the scrip closed at $2.74. There was no change in the scrip price today.


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