2019 Top deals in Real Estate space: A look at GOZ, AVN, EGH, VCX, SCG

The period between 2017-2019 has witnessed an exponential rise, in terms of total value and volume of mergers & acquisitions in Australia across all the sectors. The total value in FY 2019 ($45.9 billion) has doubled up from FY 2017 ($23.4 billion).

Out of all the sectors in Australia, the contribution of real estate sector in total value of M&A deals during FY 2019 period has been of 11 percent, which amounts to around $5 billion. These deals include of cross borders, inbound and outbound transactions and domestic deals of Australia.

Some of the major deals announced in Australia, in Real Estate sector in FY 2019 are as follows:

Other deals inked between 2018-2019 are as follows:

As of 28 March 2019, ESR Real Estate (Australia) Pty Ltd (ESR Australia) had bought 98 percent of fully paid ordinary stapled securities of Propertylink Group (ASX: PLG) for $723 million.

As at 31 December 2018, Propertylink had a total book value of $1.8 billion and its portfolio comprises of wide range of assets, primarily in Sydney and Melbourne.

On 19 December 2019, ASX listed Lendlease Group (ASX: LLC) announced that the company will divest its engineering business to Acciona Infrastructure Asia Pacific (Acciona) for $180 million.

Zooming the lens over real estate stocks listed on ASX – MSB, MEQ, PNV, EOF and OPT, lets figure out their profile, stock performance and M&A’s:

Growthpoint Properties Australia (ASX: GOZ)

Publicly listed on ASX, Growthpoint Properties Australia (ASX: GOZ) is in the business of owning and managing investment property across Australia. GOZ invests in retail sectors, industrial and office property, valued at $4.0 billion.

Lease with New South Wales Police Force: On 23 December 2019, the company announced inking of a new lease for 25-years with New South Wales Police Force (NSWPF) as a replacement to the existing lease which was scheduled to expire in May 2024. The new lease will begin from 1 January 2020 wherein, NSWPF will occupy 444 car spaces at the Curtis Cheng Centre and 32,356 sq. m. of office space (A-grade).

This new lease will raise GOZ’s pro-forma portfolio WALE or weighted average lease expiry from the earlier 4.9 years (as at 30 September 2019) to the current 6.5 years duration.

Dividend Distribution: On 18 December 2019, GOZ announced the dividend payment distribution for the period closed 31 December 2019 for the amount $0.118. Dividend had an ex date of 30 December 2019, with a record date of 31 December last year. The dividend has a payment date of 28 February 2020.

Director’s change in securities: On 13 December 2019, GOZ notified the market that one of its directors, Mr Timothy Collyer changed his interests in the company on 12 December 2019.

Mr Collyer acquired 35,486 stapled securities. He also acquired185,185 (Performance Rights, FY20 forward looking LTI), along with 35,486 (Performance Rights tranche 2, FY19 transitional). The director further acquired 32,412 – FY19 FY 19 deferred short-term incentive (STI) (tranche 1), and 32,421 – FY19 deferred STI Performance Rights (tranche 2).

Stock Performance –

On 10 January 2020, the stock of GOZ last traded at $ 4.250, moving up by 0.95% compared to its previous closing price. The company has outstanding shares of around 771.78 million. Also, GOZ has a market capitalisation of nearly $3.25 billion, while 52 weeks low and high price of the stock was noted at $3.630 and $4.520, respectively. The stock has delivered a positive return of 15.03 percent in the last one year.

Aventus Group (ASX: AVN)

Australia based, Aventus Group (ASX: AVN) caters to tenants, investors and local communities. The company has 20 centres to manage nationally, assets under management of $2.1 billion and gross leasable area of 535,000 square meter.

Announcement of Change in substantial holding: On 27 December 2019, AVN notified the market that Vanguard Group has changed its interest as a substantial holder in Aventus Group. Vanguard Group has increased its voting power from the previously held 5.105 percent (25,038,243 number of votes) to 6.131 percent (34,080,884 number of votes).

Dividend Distribution: On 13 December 2019, AVN announced the dividend payment distribution for the period closed 31 December 2019 for the amount $0.0426. Dividend had an ex date of 30 December 2019, with a record date of 31 December last year. The dividend has a payment date of 20 February 2020.

Increase of Portfolio Value: On 13 December 2019, AVN notified the market that the gross revaluation of its portfolio of substantial format retail centres (as at 31 December 2019) was followed by a rise of $38 million. The value of AVN portfolio barring McGraths Hill Home was $1.97 billion during the period.

Stock Performance –

On 10 January 2020, the stock of AVN last traded at $ 2.810, unchanged compared to its previous closing price. The company has outstanding shares of around ~555.96 million. Also, AVN has a market capitalisation of nearly $ 1.56 billion, while the 52 weeks low and high price of the stock was noted at $ 2.070 and $ 2.960, respectively. The stock has delivered a positive return of 18.57 percent in last six months and 35.75 percent in the last one year.

Eureka Group Holdings Limited (ASX:EGH)

An ASX-listed entity, Eureka Group Holdings Limited (ASX:EGH) lays emphasis on the provision of good quality independent living communities for the aged population of the nation. EGH has swiftly growing portfolio of villages. It is a property manager which includes of forty-one villages in the country representing 2182 units.

Acquisition of rental village in Queensland: On 20 December 2019, the company notified that it has inked an unconditional contract acquiring rental village of 124 units for independent aged people in Bundaberg, Queensland for a total consideration of $13.13 million.

The transaction would be funded by debt and cash reserves and is anticipated to settle during the next month period. Post this transaction, EGH’s loan to value ratio would be below fifty percent.

The acquisition is consistent with EGH’s plan to recycle capital from the realisation and sale of non-core and under-performing assets and carry on acquisitions to expand its core business in the seniors’ independent living sector.

Announcement of Change in substantial holding: Recently on 10 December 2019, EGH notified the market that NAOS Asset Management Limited and related parties changed theirs interest as a substantial holder in Eureka Group Holdings Limited. NAOS’ voting power increased from 14.94 percent to 17.32 percent, effective from 6 December 2019.

Previously, NAOS increased its voting power from the 13.73 percent to 14.94 percent, effective from 26 November 2019.

Announcement of Change in substantial holding: On 22 November 2019, EGH notified the market that Salt Funds Management Limited, a substantial holder in the company has changed its interest in Eureka Group Holdings Limited. Salt Funds Management Limited decreased its voting power from the previously held 7.250 percent to 6.132 percent, effective from 20 November, last year.

Stock Performance –

On 10 January 2020, the stock of EGH last at $ 0.380, with 0% change from its last close. The company has outstanding shares of around ~ 230.04 million. Also, AVN has a market capitalisation of nearly $ 87.41 million, while the 52 weeks high price of the stock was noted at $ 0.385. The stock has delivered a positive return of 46.15 percent and 38.18 percent in last six months and in the last one year respectively.

Vicinity Centres (ASX: VCX)

ASX-listed real estate company, Vicinity Centres (ASX:VCX) is a leader in the retail property group space, and has a completely integrated asset management platform.

Acquired 50% stake in Uni Hill: On 23 December 2019, the company announced that they were acquiring 50 percent stake in Uni Hill Factory Outlets from MAB Corporation with the remaining 50 percent stake residing with MAB Corporation itself. The value of the deal is $67.8 million.

Divestment of 50% stake in Lennox Village: VCX divested 50 percent stake in Lennox Village (as on 30 June last year, at book value of $31.5 million) to joint owner Challenger, in a similar exchange and settlement (as on 11 December last year).

Director’s change in securities: On 11 December 2019, VCX notified the market that its CEO, Mr Grant Lewis Kelley changed his interests in the company, effective from 10 December 2019. The CEO acquired 762,941 Performance Rights under the FY 2020 Long Term Incentive Plan (LTIP).

Stock Performance

On 10 January 2020, the stock of VCX last traded flat at $ 2.510. The company has outstanding shares of around ~ 3.76 billion. Also, VCX has a market capitalisation of nearly $ 9.44 billion, while the 52 weeks low and high price of the stock was noted at $ 2.415 and $ 2.720, respectively. The stock has delivered a negative return of 2.71 percent in the last one year.

Business Model

Source: Company Website

Scentre Group (ASX: SCG)

An ASX-listed company, Scentre Group (ASX: SCG) is the owner and operator of the distinguished living centres in both Australia and New Zealand regions with retail real estate assets under management.

Director’s change in interest: On 18 December 2019, SCG notified the market that one of its directors, Mr Peter Kenneth Allen changed his interests in the company effective from 16 December 2019. The director acquired 993,301 and now holds a total of 5,510,627 securities.

Acquisition of 50% stakes in Booragoon: On 6 December 2019, the company updated the market that it has made an acquisition of 50 percent stake in Graden City Booragoon, for the amount of $570, all-encompassing long-term property management, brand and development rights.

The acquisition price reflects a steady economic yield of around 5.5 percent. The present passing yield is ~ 4.7 percent, with the instant emphasis on enhancing income back to its complete capacity. The transaction is anticipated to be slightly accretive to SCG’s earnings from this year and would boost gearing to 31.7 percent (pro-forma 30 June last year and prior to the buyback of SCG shares).

Booragoon was previously wholly owned by AMP Capital Diversified Property Fund that has now turn into SCG’s fifty percent JV partner.

Announcement of Change in substantial holding: On 3 December 2019, SCG notified the market that UniSuper Limited has changed its interest, as a substantial holder in Scentre Group. On 22 November 2019, UniSuper Limited increased its voting power from the previously held 8.59 percent to the current 9.66 percent.

Stock Performance –

On 10 January 2020, the stock of SCG last traded at $3.980, with 1.015% change compared to its previous closing price. The company has outstanding shares of around ~ 5.24 billion. Also, SCG has a market capitalisation of nearly $ 20.64 billion, while the 52 weeks low and high price of the stock was noted at $ 3.630 and $ 4.160, respectively. The stock has delivered a negative return of 1.50 percent in the last one year.

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