A Peek into Five REIT Stocks: AOG, AVN, NSR, UOS & CQE

This article talks about the five REIT stocks from the Australian Stock Exchange. These companies are invested in the Australian real estate market, and one of the companies is also invested in the overseas market.

Aveo Group (ASX: AOG)

On 14 August 2019, the company announced that it has entered into a Scheme Implementation Deed (SID) with Brookfield Property Group.

Accordingly, Brookfield would be taking over all the outstanding shares of Aveo through its controlled entity Hydra RL BidCo Pty Ltd. Besides, the SID was entered by Hydra RL BidCo Pty Ltd (BidCo) & Hydra RL TopCo Pty Ltd (TopCo), both are controlled entities of Brookfield.

FY19 Development Projects Under Construction (Source: AOG Half Year Results Presentation)

Reportedly, the SID provides a cash consideration of $2.195 per security, which includes the FY19 annual distribution of 4.5 cents per share, and the consideration would be reduced by any additional dividend.

Besides, it provides a scrip alternative, securityholders who elect the scrip alternative would be entitled to receive units in AOG L.P, which would hold Class B securities of TopCo. Importantly, in order to elect for scrip alternative, the securityholders must hold 10% or more in Aveo, and TopCo would only accept up to 30% of TopCo securities, scaleback arrangements would be applied if securityholders opt for over 30% limit.

As per the release, cash consideration represents a premium of approximately 28% to the closing price of $1.71 on 12 February 2019. Besides, it represents an equity value of $1.3 billion, enterprise value of $2 billion, an FY19 EV/ EBITDA (Unaudited) multiple of approximately 29x. The directors of the group had asserted to vote in favour of the cash consideration in the absence of superior offer. Further, the transaction would depend on Independent Expert, concluding in favour of the transaction.

On 15 August 2019, AOG was trading at A$2.12, up by 0.236% from the prior close (as at AEST: 12:51 PM).

Aventus Group (ASX: AVN)

The group had announced on 25 July 2019 that the full-year results would be made available to the market on 21 August 2019. Besides, it would hold an investor & analyst briefing teleconference call, and a Q&A session.

On 9 August 2019, the group updated on the court proceedings with its tenant. Accordingly, the group’s subsidiary is the lessor to the former Masters store at Cranbourne Home (Head Lease). The tenant had pursued lessor’s consent to sub-lease part of premises, which was withheld, and the tenant commenced court proceedings in the Supreme Court of Victoria seeking declarations related to consent to the sub-lease.

Subsequently, on 8 August 2019, the court delivered judgement on the claim made by the tenant, and it was found that the lessor is required to consent to a proposed sub-lease to Amart of part of the premises at Cranbourne. The lessor is considering the judgement done by the Supreme Court of Victoria.

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Portfolio Valuation (Source: Group’s Announcement, June 2019)

On 24 June 2019, the group updated on the preliminary revaluation of its portfolio of large format retail centres as on 30 June 2019. Subsequently, the preliminary revaluation resulted in a modest revaluation gain of $40 million, and the value of the portfolio increased to $1.98 billion during the period.

On 15 August 2019, AVN was trading at A$2.490, down by 1.19% from the previous close (as at AEST: 12:51 PM).

National Storage REIT (ASX: NSR)

On 30 July 2019, the REIT announced the closure of its Security Purchase Plan (SPP), as on 23 July 2019. Accordingly, the SPP had resulted in the issue of approximately 7,917,735 million new ordinary stapled securities at $1.71 per security to raise approximately $13.5 million while no scaleback was applied to the SPP.

Equity Raising Rationale (Source: NSR Presentation - Business Update and Equity Raising, June 2019)

As per the release, NSR had successfully raised $183.5 million excluding costs, which was inclusive of the institutional placement raising $170 million. The SPP & placement was intended to reduce gearing levels to ensure continued growth and financial flexibility. Meanwhile, the newly issued securities were not entitled to distribution for the period ending 30 June 2019.

On 24 June 2019, the REIT had announced a fully-franked dividend of AU 5.1 cents per share, the dividend was ex on 27 June 2019, the record date was 28 June 2019 with a payment date of 5 September 2019. It also offered a dividend reinvestment plan for this dividend.

On 15 August 2019, NSR was trading at A$1.687, down by 0.472% from the previous close (as at AEST: 12:54 PM).

United Overseas Australia Limited (ASX: UOS)

Headquartered in Kuala Lumpur, United Overseas Australia Limited was listed on ASX in the year 1987. It is focused on the construction, property investment, property development and property management. Besides, it is a majority shareholder in UOA REIT listed on the Malaysian Stock Exchange. United Overseas has its construction & development division - UOA Development Bhd listed on the Malaysian Stock Exchange as well.

As of 31 December 2018, UOS held a direct interest of 0.18%, and an indirect interest (via subsidiary) of 69.81% in the UOA Development Bhd. On 26 February 2019, UOS reported the results for the full year ended 31 December 2018. Accordingly, it recorded an operating profit of $196.1 million for the period. Following the taxation & non-controlling interest, the operating profit applicable to the members of the company was $100.8 million, down by 10.2% over the 2017 result.

Meanwhile, the gross revenues from ordinary activities were $440.5 million, up by $112.7 million over the previous revenues of $327.8 million. Besides, the EPS for the period was 7.22 cents, down by 1.19 cents against 8.41 cents per share in the previous corresponding period.

On 30 May 2019, UOA Development Bhd (UOA) reported results for the first quarter ended 31 March 2019. Accordingly, UOA reported revenues of RM244.7 million in Q12019 against RM172 million in Q12018, representing an increase of 42.3%.

Property Asset (Source: Annual Report 2018 - UOA Development Bhd)

Meanwhile, the gross profit for the period was RM80.3 million, up by 57.4% from RM51 million in Q12018. The total profit after tax was RM62.5 million for the quarter, up by 85.1% from RM33.8 million in Q12018. Importantly, the profit attributable to the owners of the company was RM59.9 million, up by 85.5% from RM32.3 million in Q12018.

On 15 August 2019, UOS was trading at A$0.780, flat as compared to the previous close (as at AEST: 12:54 PM).

Charter Hall Education Trust (ASX: CQE)

On 7 August 2019, the trust announced the results for the period ended 30 June 2019. Accordingly, the operating earnings of the trust were up by 5.5% to $44.2 million over the prior corresponding period. The Net Tangible Asset (NTA) per unit was up by 6.5 cents to $2.96 per unit as at 30 June 2019 from $2.78 per unit as on 30 June 2018.

Reportedly, the statutory profit was down by 33.4% to $68.7 million FY2019 compared with $103.1 million in FY2019, which was due to the lower property revaluation increments during the period. The trust completed capital raising activity to $120 million via institutional placement and $19.3 million via a unit purchase plan at an issue price of $3.35 per unit.

Strategy (Source: CQE FY19 Results Presentation)

Property Portfolio Performance: As per the release, the trust recorded 2.3% like-for-like rental growth across the portfolio for the 12 months, and eleven out of eleven five year options were exercised increasing the lease term to ten years from five years. Besides, it completed and commenced six developments during the period with a total value of $30.7 million. The trust also disposed of seven properties during the period, and $9.2 million were received in gross proceeds.

Dividend: As per the release, the trust distributes income every quarter, and for the June quarter, it announced the distribution of 4 cents per unit. Subsequently, the distribution for the full year 2019 was 16 cents per unit, and the June quarter dividend was paid on 19 July 2019.

FY20 Guidance: Reportedly, the trust has forecasted FY20 earnings guidance of 3-4 per cent growth, and the distribution guidance for the next year is 16.7 cents per unit. Besides, the trust would continue to execute its strategy and emphasise on assets that provide service to communities, which underpin the employment generation and its sustainability.

On 15 August 2019, CQE was trading at A$3.745, up by 0.402% from the previous close (as at AEST: 12:55 PM).


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