Abacus Property Group (ASX: ABP) shave off its Liverpool Plaza for $46 million that sits around its current book value.
In the announcement dated 20 March 2019, Abacus Property told that it has inked a contract to sell Liverpool Plaza and the two other nearby properties in Liverpool, New South Wales for a consideration of $46 million. The transaction is due to be settled by 9 December 2019.
Abacus has come to the decision of disposing of its Liverpool Properties after considering several offers and rounds of negotiations. The transaction underscores the company’s strategy to focus on ‘super convenience’ shopping centres located in Lutwyche in Brisbane and Ashfield in Sydney.
The company recently released its half-yearly results for the six months ended 31 December 2018. Its statutory profit increased by 9% to $127.8 million in 1HFY19 compared to the previous corresponding period. But its underlying profit was down 7% from $77.3 million in 1HFY18 to $72.0 million in 1HFY19.
Its strategic priorities revolve around three factors including commercial investment property, self-storage and capital partnering with focus on longer-dated recurring earnings and organic as well as acquisition-driven growth.
On balance sheet front, the Group has confirmed the significant levels of liquidity and low gearing at 22.8% with the capacity to add to its Self-Storage and Commercial portfolios in line with its stated strategy. Moreover, the revaluation process for Abacus resulted in a net increase in investment property value by approximately 3.2% or $60.1 million for 1HFY19. It includes $43.6 million across the Self-Storage portfolio and $16.5 million across the Commercial portfolio.
In line with its desire to partner with long-term institutional capital and drive sustainable returns via the third-party transaction, Abacus facilitated joint ventures with a number of sophisticated global third-party capital providers during 1HFY19 and continue to explore additional partnerships.
Group further announced the Distribution per security of 9.25 cents, reflecting an improvement of 2.8% on 1HFY18. The distribution payout ratio stood at 82% of FFO which was 11.3%, down 18% in the first half of Fiscal 2019.
Abacus presented an optimistic outlook with the distribution guidance of 18.5 cents per security for FY19. The Group expects its development and growth strategies to drive attractive risk-adjusted returns for its shareholders in short to medium term.
However, the Group reportedly remains cautious on the Residential and discretionary Retail sectors for which the company continues to work judiciously to realise equity from legacy investments in Residential development projects and Residential land and mortgages.
On Abacus’ priority list for capital allocation, increasing investment in longer-dated core plus and develop core office assets remains on the top. It is then followed by increasing investment in self-storage and exploring capital partnering opportunities with experienced groups.
In today’s trading session, ABP stock price edged up by 0.815% to last trade at $3.710 on 20 March 2019. The stock last traded at a price to earnings multiple of 8.390x with a market capitalisation of $2.14 billion.
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