Investing in REITs Amidst Property Market Recovery; Three Stocks in the Related Space – GMG, SGP, SCG

  • Dec 27, 2019 AEDT
  • Team Kalkine
Investing in REITs Amidst Property Market Recovery; Three Stocks in the Related Space – GMG, SGP, SCG

The Australian property market is continuing its fast recovery after observing a fall for several months. The house prices are surging in most of the capital cities of the country, with Sydney and Melbourne experiencing a speedy recovery.

The recent statistics declared by the ABS demonstrated that the property prices surged by 2.4 per cent in the third quarter of 2019, recording the strongest quarterly growth since 2016 December quarter. The residential property prices improved in the following capital cities:

Ø Sydney - 3.6 per cent

Ø Melbourne - 3.6 per cent

Ø Brisbane - 0.7 per cent

Ø Hobart - 1.3 per cent

The increase in house prices was in accordance with the property market indicators, especially in Melbourne and Sydney. Moreover, new auction clearance rates, sales transactions and lending commitments to households all improved during the quarter.

On the other hand, Adelaide, Perth, Darwin and Canberra saw a fall in their respective residential property prices during the September quarter. However, the decline in Adelaide, Perth and Darwin was comparatively less than the fall during the June 2019 quarter. It is worth noting that property prices improved by 0.2 per cent in the June quarter, but slid by 0.5 per cent in the September quarter.

A property consultant, CoreLogic has also recently released the data on property prices for November 2019. The data indicated an improvement in property prices by 1.7 per cent during the month, marking the biggest monthly increase since 2003.

The house prices rose by 2.7 per cent and 2.2 per cent in Sydney and Melbourne, respectively in November. Almost all the capital cities witnessed a rise during the month, except Darwin.

As per market experts, the housing market outlook seems to be promising amid expectations of a further recovery in property prices. Amidst this favourable outlook, investing in REITs in 2020 is definitely a great idea.

Given this background, let us discuss three REITs listed on the ASX that are drawing investors’ attention for various reasons:

Goodman Group Announced Dividend and Q1 FY20 Results

Australia-based commercial property firm, Goodman Group (ASX: GMG) has recently announced a dividend of $0.15 for its fully paid ordinary/units stapled securities.

The dividend carries an ex-date and record date of 30th December 2019 and 31st December 2019 and is to be paid on 25th February 2020. Moreover, the dividend is related to a period of six months and is 100 per cent unfranked.

Besides dividend, the Company also released its quarterly results for the three months ended 30th September 2019. The following are the key highlights of quarterly results:

Ø Total assets under management (AUM) grew to $48.2 billion due to strong property revaluations and development completions.

Ø Demand continues to outstrip supply in the markets where Goodman operates, resulting in a continued high occupancy of 98 per cent.

Ø New leasing across the global platform for the first quarter reflected $93.5 million of property income per annum with rolling 12 month like-for-like rental growth of 3.3 per cent.

Ø Work in progress grew to $4.2 billion with a strong development pipeline.

Ø $0.9 billion of development commencements were undertaken with a long average lease term of 15.5 years.

Ø $0.8 billion of developments were completed around the world, of which 85 per cent were pre-committed.

Ø External assets under management were recorded at $44.9 billion.

Ø The Company’s capital Partners increased their development activity with 81 per cent currently being undertaken in partnerships or for third parties.

Ø The positive performance of the partnerships continued, with 363 properties in partnerships.

As per the Company, it produced a strong first quarter as it continues to deploy capital through development in key urban locations. The refinement and concentration of its real estate in these markets ensure its customers have access to high-quality facilities close to consumers.

GMG closed the trading session at $13.740 on 27th December 2019, with a rise of 0.22 per cent relative to the last closed price. The stock has delivered a return of about 28.37 per cent on a YTD basis.

Stockland Declared Dividend of $0.135

Australian property developer, Stockland (ASX: SGP) has also recently announced an estimated distribution amounting to $0.135 for its fully paid ordinary/units stapled securities.

The dividend carries an ex-date and record date of 30th December 2019 and 31st December 2019 and is to be paid on 28th February 2020. Moreover, the dividend is related to a period of six months and is 100 per cent unfranked.

The Company’s estimated distribution for the half year is in accordance with the market guidance issued in its Q1 FY20 update and FY19 results. The Company has forecasted a total distribution per security of 27.6 cents per ordinary stapled security for the 12 months to 30 June 2020.

In addition, the Company has also recently unlocked development opportunity in North Sydney, via entering into agreements to acquire two office buildings in North Sydney for a combined price of $121 million, in accordance with recent transactions in the area.

As per Stockland’s CEO and Managing Director, Mark Steinert, the transaction aligns with its broader strategy to increase the development pipeline and up-weight its workplace portfolio, particularly through Melbourne and Sydney opportunities that improve long-term income and valuation resilience.

The acquisitions are expected to increase the Company’s exposure to the robust office market in order to unlock further future development potential for street level retail and new office.

SGP settled the day’s trade at $4.83 on 27th December 2019, with a rise of 0.62 per cent relative to the last closed price. The stock has delivered a return of about ~39.13 per cent on a YTD basis.

Scentre Group Acquired a 50% Interest in Booragoon

New South Wales-headquartered shopping centre company, Scentre Group Limited (ASX: SCG) has recently acquired a 50 per cent stake in Garden City Booragoon, Perth. The stake has been obtained for $570 million, comprising long-term property management, brand and development rights.

Booragoon, which was earlier 100 per cent owned by AMP Capital Diversified Property Fund, became the Company’s 50 per cent joint partner with the transaction.

The transaction is likely to be marginally accretive to the Company’s earnings from 2020 and will raise its gearing to 31.7 per cent (pro forma 30th June 2019 and before the buyback of SCG securities).

In addition, the Company also announced its 3rd Quarter 2019 operating update on 31st October 2019. The Company observed a continued growth in customer visitation (more than 535 million) during the quarter, that demonstrates its focus on delivering what customers want.

The following are the key highlights of quarterly results:

Ø Total in-store sales improved by 2.4 per cent during the quarter and 1.6 per cent for the year.

Ø Specialty in-store sales rose by 2.9 per cent for the three months and 1.8 per cent for the year.

Ø Majors in-store sales were at negative 0.6 per cent for the three months and 1 per cent for the year.

Ø An average specialty store in its portfolio generated annual in-store sales of more than $1.52 million per store.

Ø The total portfolio sales were over $24 billion.

SCG closed the day’s trade at $3.93 on 27th December 2019, with a rise of 0.51 per cent relative to the last closed price. The stock has delivered a return of about ~1.82 per cent on a YTD basis.


Disclaimer

This website is a service of Kalkine Media Pty. Ltd. A.C.N. 629 651 672. The website has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. Kalkine Media does not in any way endorse or recommend individuals, products or services that may be discussed on this site. Our publications are NOT a solicitation or recommendation to buy, sell or hold. We are neither licensed nor qualified to provide investment advice.

Ø Sydney - 3.6 per cent

Ø Melbourne - 3.6 per cent

Ø Brisbane - 0.7 per cent

Ø Hobart - 1.3 per cent

The increase in house prices was in accordance with the property market indicators, especially in Melbourne and Sydney. Moreover, new auction clearance rates, sales transactions and lending commitments to households all improved during the quarter.

On the other hand, Adelaide, Perth, Darwin and Canberra saw a fall in their respective residential property prices during the September quarter. However, the decline in Adelaide, Perth and Darwin was comparatively less than the fall during the June 2019 quarter. It is worth noting that property prices improved by 0.2 per cent in the June quarter, but slid by 0.5 per cent in the September quarter.

A property consultant, CoreLogic has also recently released the data on property prices for November 2019. The data indicated an improvement in property prices by 1.7 per cent during the month, marking the biggest monthly increase since 2003.

The house prices rose by 2.7 per cent and 2.2 per cent in Sydney and Melbourne, respectively in November. Almost all the capital cities witnessed a rise during the month, except Darwin.

As per market experts, the housing market outlook seems to be promising amid expectations of a further recovery in property prices. Amidst this favourable outlook, investing in REITs in 2020 is definitely a great idea.

Given this background, let us discuss three REITs listed on the ASX that are drawing investors’ attention for various reasons:

Goodman Group Announced Dividend and Q1 FY20 Results

Australia-based commercial property firm, Goodman Group (ASX: GMG) has recently announced a dividend of $0.15 for its fully paid ordinary/units stapled securities.

The dividend carries an ex-date and record date of 30th December 2019 and 31st December 2019 and is to be paid on 25th February 2020. Moreover, the dividend is related to a period of six months and is 100 per cent unfranked.

Besides dividend, the Company also released its quarterly results for the three months ended 30th September 2019. The following are the key highlights of quarterly results:

Ø Total assets under management (AUM) grew to $48.2 billion due to strong property revaluations and development completions.

Ø Demand continues to outstrip supply in the markets where Goodman operates, resulting in a continued high occupancy of 98 per cent.

Ø New leasing across the global platform for the first quarter reflected $93.5 million of property income per annum with rolling 12 month like-for-like rental growth of 3.3 per cent.

Ø Work in progress grew to $4.2 billion with a strong development pipeline.

Ø $0.9 billion of development commencements were undertaken with a long average lease term of 15.5 years.

Ø $0.8 billion of developments were completed around the world, of which 85 per cent were pre-committed.

Ø External assets under management were recorded at $44.9 billion.

Ø The Company’s capital Partners increased their development activity with 81 per cent currently being undertaken in partnerships or for third parties.

Ø The positive performance of the partnerships continued, with 363 properties in partnerships.

As per the Company, it produced a strong first quarter as it continues to deploy capital through development in key urban locations. The refinement and concentration of its real estate in these markets ensure its customers have access to high-quality facilities close to consumers.

GMG closed the trading session at $13.740 on 27th December 2019, with a rise of 0.22 per cent relative to the last closed price. The stock has delivered a return of about 28.37 per cent on a YTD basis.

Stockland Declared Dividend of $0.135

Australian property developer, Stockland (ASX: SGP) has also recently announced an estimated distribution amounting to $0.135 for its fully paid ordinary/units stapled securities.

The dividend carries an ex-date and record date of 30th December 2019 and 31st December 2019 and is to be paid on 28th February 2020. Moreover, the dividend is related to a period of six months and is 100 per cent unfranked.

The Company’s estimated distribution for the half year is in accordance with the market guidance issued in its Q1 FY20 update and FY19 results. The Company has forecasted a total distribution per security of 27.6 cents per ordinary stapled security for the 12 months to 30 June 2020.

In addition, the Company has also recently unlocked development opportunity in North Sydney, via entering into agreements to acquire two office buildings in North Sydney for a combined price of $121 million, in accordance with recent transactions in the area.

As per Stockland’s CEO and Managing Director, Mark Steinert, the transaction aligns with its broader strategy to increase the development pipeline and up-weight its workplace portfolio, particularly through Melbourne and Sydney opportunities that improve long-term income and valuation resilience.

The acquisitions are expected to increase the Company’s exposure to the robust office market in order to unlock further future development potential for street level retail and new office.

SGP settled the day’s trade at $4.83 on 27th December 2019, with a rise of 0.62 per cent relative to the last closed price. The stock has delivered a return of about ~39.13 per cent on a YTD basis.

Scentre Group Acquired a 50% Interest in Booragoon

New South Wales-headquartered shopping centre company, Scentre Group Limited (ASX: SCG) has recently acquired a 50 per cent stake in Garden City Booragoon, Perth. The stake has been obtained for $570 million, comprising long-term property management, brand and development rights.

Booragoon, which was earlier 100 per cent owned by AMP Capital Diversified Property Fund, became the Company’s 50 per cent joint partner with the transaction.

The transaction is likely to be marginally accretive to the Company’s earnings from 2020 and will raise its gearing to 31.7 per cent (pro forma 30th June 2019 and before the buyback of SCG securities).

In addition, the Company also announced its 3rd Quarter 2019 operating update on 31st October 2019. The Company observed a continued growth in customer visitation (more than 535 million) during the quarter, that demonstrates its focus on delivering what customers want.

The following are the key highlights of quarterly results:

Ø Total in-store sales improved by 2.4 per cent during the quarter and 1.6 per cent for the year.

Ø Specialty in-store sales rose by 2.9 per cent for the three months and 1.8 per cent for the year.

Ø Majors in-store sales were at negative 0.6 per cent for the three months and 1 per cent for the year.

Ø An average specialty store in its portfolio generated annual in-store sales of more than $1.52 million per store.

Ø The total portfolio sales were over $24 billion.

SCG closed the day’s trade at $3.93 on 27th December 2019, with a rise of 0.51 per cent relative to the last closed price. The stock has delivered a return of about ~1.82 per cent on a YTD basis.


Disclaimer

This website is a service of Kalkine Media Pty. Ltd. A.C.N. 629 651 672. The website has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. Kalkine Media does not in any way endorse or recommend individuals, products or services that may be discussed on this site. Our publications are NOT a solicitation or recommendation to buy, sell or hold. We are neither licensed nor qualified to provide investment advice.

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