Updates On Four Real Estate Players- GMG, CHC, VCX, SCG

Updates On Four Real Estate Players- GMG, CHC, VCX, SCG

Commercial property sector makes significant contributions towards the growth of the Australian economy. For FY20, market experts have predicted a rebound in the country’s property market. Let us discuss four companies engaged in providing property related solutions, in addition to their recent updates and performance of these stocks listed on the ASX.

Goodman Group

Goodman Group (ASX: GMG) is an Australian integrated real estate company that have presence globally. The company includes warehouses, large-scale logistics facilities, and business and office space in its portfolio. GMG has presence in New Zealand, Asia, Europe, the United Kingdom, North America and Brazil apart from Australia. The company has more than $ 44.1 billion in total assets under management (AUM) and 384 properties under management. GMG has been added in the S&P/ASX 20 Index, effective from 24 June 2019, as per the June 2019 Quarterly Rebalance of the S&P/ASX Indices.

GMG Snapshot (Source: Company’s Website)

Dividend Distribution: GMG updated the market on 24 June 2019 regarding a dividend distribution related to a period of six months ended 30 June 2019. The company declared a $ 0.150 dividend for each fully paid ordinary/unit stapled security. The dividend has a record date of 28 June 2019 and payment date of 9 September 2019.

FY19 Expectations/FY20 Outlook: For FY19, the company has reaffirmed its forecasts and expects operating earnings per security to grow by 9.5% to 51.1 cents on FY18, and distribution per security to increase by 7% to 30 cents on FY18. Further, for the financial year 2019, the company anticipates its work in progress (WIP) to cross $ 4 billion and approach $ 5 billion in FY20, backed by growing scale of development projects and high-quality locations of its landbank.

Stock Performance: On 1 August 2019, GMG stock last traded at a price of $ 14.860, up 0.338% from its previous closing price. It has a market cap of $ 26.86 billion and 1.81 billion outstanding shares. The stock has an annual dividend yield of 2.03% and a PE ratio of 18.02x, while its EPS stands at $ 0.822. The stock has given positive returns of 12.03% and 27.02% in the last three months and six months, respectively.

Charter Hall Group

Charter Hall Group (ASX: CHC), an integrated real estate company, is engaged in managing and investing in listed and unlisted property funds across the office, retail, industrial and social infrastructure sectors. The company holds an experience of over 28 years in property investment and funds management. CHC, through a partnership, has acquired freehold interest (100%) in the Global HQ of Telstra Corporation Limited (ASX: TLS) for a total value of $ 830 million.

Source: Company’s Report 

Raised Forecast for FY19 OEPS Growth: CHC has raised the FY2019 post-tax operating earnings per security (OEPS) growth expectations to about 24% on FY18 from its previous FY19 guidance of 14-17%. The figures are subject to fully finalised and audited accounts. Upgrades to the guidance is on the back of strong growth in funds under management, strong transactional activity and the returns of the company’s funds, according to CHC Managing Director and Group CEO, David Harrison.The company also expects the second half FY2019 net valuations to be about $ 450 million across the funds management platform, which means a 1.6% growth in funds under management (FUM) compared to the FUM of $ 28.4 billion posted at the end of the first half of FY19. It anticipates the second half FY2019 FUM to grow by 6.3% to $ 30.2 billion.

As per a company announcement on 17 July 2019, an entity associated with Abacus Property Group and CHC in a consortium have placed an improved, indicative and non-binding proposal to acquire all the shares in Australian Unity Office Fund (ASX: AOF) that it does not already hold for a consideration of $ 3.04 cash per unit. For this, the consortium has inked a Confidentiality Deed as a part of conducting non-exclusive due diligence.

Stock Performance: On 1 August 2019, CHC stock last traded at a price of $ 11.490, up 1.502% from its previous closing price. It has a market cap of $ 5.27 billion and 465.78 million outstanding shares. The stock has an annual dividend yield of 2.98% and a PE ratio of 20.04x, while its EPS stands at $ 0.565. The stock has given positive returns of 14.23% and 37.55% in the last three months and six months, respectively.

 

Vicinity Centres

Vicinity Centres (ASX: VCX), a leading Australian Real Estate Investment Trust company, owns and manages shopping centres across the country. The company also manages investment in properties, in addition to their development, leasing and funds management.

Chairman succession update: Mr Peter Kahan, who is scheduled to serve as the Chairman of the company after the announcement related to annual results for FY19 on 14 August 2019, has taken a leave of absence from his current role as a Non-executive Director. The leave is due to a health issue. Meanwhile, Mr Peter Hay, who is the company’s current chairman, will serve as the Acting Chairman during the leave of absence of Mr Peter. 

Medium Term Note Pricing: VCX has priced six-year Australian dollar medium term notes of $ 400 million. Of the total notes, fixed rate notes accounted for $ 225 million, which were priced at a coupon of 2.60%. The remaining notes were floating rate notes, which were worth $ 175 million and priced at a coupon of 3-month bank bill swap rate in addition to 142 basis points. Funds from the issue will be used by the company for general corporate purposes, in addition to repaying existing bank facilities. 

Decline in Overall Portfolio’s Net Valuations: For the six-month period to 30 June 2019, the overall portfolio’s net valuations declined by 1.3%, on the back of a fall in the portfolio of Western Australia and pre-development centres. According to the company, 35 of its 62 retail properties in which it directly owns a stake (57% by value) are in the final stages of being independently valued. The remaining properties are being internally valued.

Forecast Valuations of Vicinity’s Directly Owned Portfolio (Source: Company’s Report)

Stock Performance: On 1 August 2019, VCX stock last traded at a price of $ 2.610. It has a market cap of $ 9.84 billion and 3.77 billion outstanding shares. The stock has an annual dividend yield of 6.09% and a PE ratio of 14.42x, while its EPS stands at $ 0.181. The stock has given positive returns of 4.82% and 3.16% in the last one month and three months, respectively.

 

Scentre Group

Scentre Group (ASX: SCG) is an ASX-listed company that manages all the activities related with the development of shopping centres. The activities encompass the design, construction and development of shopping centres, in addition to their leasing, management and marketing. The company has operations in the markets of Australia and New Zealand.

SCG Portfolio (Source: Company’s Website)

Security Buy-Back Program: SCG plans to commence $ 800 million worth of security buy-back program after the release of half year 2019 results. The results are scheduled for release on 22 August 2019. For FY19, the company expects to distribute 22.60 cents per security. Moreover, SCG has unveiled the sale of its CBD office towers located in Sydney. The deal was made with certain funds managed by Blackstone for a total value of $ 1.52 billion.

The company will use this fund for the repayment of debt, which is also anticipated to result in the dilution of 2019 Funds From Operations (FFO) by about 0.4 cents per security. The company has released capital of $ 2.1 billion (from the transaction and joint venturing of Westfield Burwood) for strategic goals.

Stock Performance: On 1 August 2019, SCG stock last traded at a price of $ 4.020, up 0.752% from its previous closing price. It has a market cap of $ 21.21 billion and 5.32 billion outstanding shares. The stock has an annual dividend yield of 5.55% and a PE ratio of 9.26x, while its EPS stands at $ 0.431. The stock has given positive returns of 5.00% and 0.50% in the last three months and six months, respectively.


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