Real estate sector in Australia has delivered mixed performance during the last one year. Due to the macro environment slowdown, most of the investors witnessed lower yields during the timeframe. However, management of the leading real estate companies in Australia are expecting recoveries in the sector, driven by lower cost of borrowings and improvement in investor sentiments. Let’s have a look at five property stocks listed on the ASX.
Lendlease Group (ASX: LLC)
Lendlease Group is engaged in development and investment activities in properties across Australia, Asia, Europe and Americas. With a market update, LLC notified that one of its directors named Nicola Wakefield Evans acquired 360 (Danby) ordinary stapled securities at a value consideration of $16.8545.
In October 2019, the Independent Planning Commission (IPC) of New South Wales gave the company approval for the last tower (a new 30-storey residential and retail development) at Barangaroo in Sydney, Australia, enabling the company to sell apartments in the three residential Barangaroo towers.
Highlights for FY19 ended 30 June 2019:
- The company delivered profit after tax of $804 million through the core business during FY19 and a core return on equity of 12.8% as on 30 June 2019.
- LLC has a development pipeline of $100 billion.
- The business got approval for three urbanisation projects in Milan, Chicago and Sydney during FY19.
- The company posted operating EBITDA at $1,493 million and PAT of $804 million during FY19.
- LLC reported a 17% growth in Funds Under Management (FUM) at $35.2 billion during the year.
- The company is banking on two projects in London and Birmingham, valued at c.$17 billion followed by a c.$20 billion project in the San Francisco Bay Area.
- The company made a FY19 full year dividend distribution of 42 cents per stapled security.
- The non-core business witnessed after tax loss of $337 million due to a $500 million pretax provision for underperforming projects that was brought to account in the first half of FY19.
FY19 Financial Highlights (Source: Company’s Reports)
Stock Update: The stock of LLC closed the day’s trading at $17.475 on 15 October 2019, down 0.879% from its previous closing price. The stock has a with a market capitalisation of $9.95 billion and is available at a price to earnings (P/E) of 21.27x. The stock has generated stellar returns of 24.15% and 36.88% during the last three months and six months, respectively. The stock has a dividend yield of 2.38% on an annualised basis.
Stockland (ASX: SGP)
Stockland is in the business of owning, developing and handling a diversified portfolio of commercial complexes, residential units, corporate offices, retirement living villages and other assets across Australia. The property stock was listed on ASX in 1987.
Buy Back Program: In early September 2019, the company unveiled the continuation of its on-market security buy-back program, which is expected to run until 20 September 2020 or the date when the company would complete the buyback of $350 million worth of Stockland securities on issue, whichever is sooner.
The buyback will continue to be funded by a combination of Stockland’s existing debt facilities and proceeds received from the divestment of its non-core assets. SGP bought-back and cancelled 50,117,773 securities as on 4 September 2019 for a price consideration of approximately $192.36 million.
Stock Update: The stock of SGP settled at $4.560 on 15 October 2019, up 0.885% from its previous closing price. The stock is trading with a market capitalisation of $10.78 billion and, is currently available at a price to earnings (P/E) of 34.77x. The stock has generated returns of -1.95% and 15.31% during the last three months and six months, respectively. The stock has a dividend yield of 6.11% on an annualised basis.
GPT Group (ASX: GPT)
GPT Group is engaged in fund management and property investment activities across various real estate segments like office, retail and logistics. Recently, the company notified that it appointed Mark John Menhinnitt as a director on 01 October 2019.
In a release on 2019 interim result for the six-month period ended 30 June 2019
- The company unveiled to have maintained a conservative gearing policy of 25-35% along with a preference of less than 30%.
- GPT successfully raised $867 million in during the period.
- At the end of H1FY19, the company reported net tangible assets per security at $5.66 and net gearing at 22% followed by weighted average cost of debt of 3.8%.
Operating Snapshot of GPT Group for H1FY19 (Source: Company’s Reports)
Outlook: The Management of the company is expecting improved business scenario from price stabilisation in the real estate segment, well supported by lower interest rates and tax cuts. The company’s ongoing investment across infrastructure projects in Sydney and Melbourne will support its core market and sector operations. Across the retail segment, the company is expecting the second half segment contribution to increase from the first half, aided by a six-month contribution from the Sunshine Plaza expansion and reduced downtime. The company expects FFO per security growth of 2.5% in the current financial year followed by a 4% growth in DPS.
Stock Update: The stock price of GPT settled at $6.13 on 15 October 2019, up 0.163% from its previous closing price. The stock is trading at a market capitalisation of $11.92 billion and, is currently available at a price to earnings (P/E) of 10.28x. The stock has generated returns of -0.33% and 2.68% during the last three months and six months, respectively. The stock has a dividend yield of 4.24% on an annualised basis.
Vicinity Centres (ASX: VCX)
Vicinity Centres is engaged in the business of real estate investment as well as owns and operates shopping centres across Australia. The company is scheduled to hold its annual general meeting on 14 November 2019. Recently, the company announced that one of its directors named Grant Lewis Kelley acquired 163,575 stapled securities.
Financial Highlights During FY19 ended 30 June 2019:
- The company reported total revenue and income of $1,232.7 million as compared to $1,270.4 million during FY18.
- Bottom-line stood at $319.4 as compared to $1,175.6 million on FY18.
- The company reported cash at $27.2 million, total assets at $16,730.3 million and net assets at $11,401.9 million, as on 30 June 2019.
- Net cash flow from operations stood at $592.2 million, net cash inflows from investing activities came in at $289.6 million while the company reported $889.8 million of net cash outflows from financing activities during FY19.
Stock Update: The stock price of VCX settled at $2.630 on 15 October 2019, up 1.544% from its previous closing price. The property stock is trading at a market capitalisation of $9.74 billion and, is currently available at a price to earnings (P/E) of 28.65x. The stock has generated returns of 1.17% and 3.19% during the last three months and six months, respectively. The stock has a dividend yield of 6.14% on an annualised basis.
Growthpoint Properties Australia (ASX: GOZ)
Growthpoint Properties Australia is involved in managing and investing in real estate across Australia. GOZ handles a portfolio of 57 industrial properties and offices across the country. On 14 October 2019, the company made a new issue announcement, unveiling the issue of 705 stapled securities and 706 performance rights.
Recently, GOZ announced that it has collaborated with Frasers property Group for the acquisition of 3 Maker Place, Truganina and Victoria for $40 million. As per the press release, the property is newly constructed and has a warehouse of 31,092 square meters of gross lettable area.
Stock Update: The stock of GOZ settled at $4.32 on 15 October 2019. The stock is trading at a market capitalisation of $3.33 billion and, is currently available at a price to earnings (P/E) of 8.17x. The stock has generated returns of 1.17% and 4.35% during the last three months and six months, respectively. The stock has generated a dividend yield of 5.32% on an annualised basis.
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