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Recently, real estate players in Australia have been pronouncing their earnings update and several other operational achievements. Here we talk about five real estate stocks that have shown significant growth and expansion in financial as well as operational aspect.
With favourable conditions continuing in the Australian property for some time now, the real estate players have enjoyed significant growth and expansions across Australia.
Let us look at the latest development from these stocks.
National Storage REIT (ASX:NSR)
Being the largest self-storage owner-operator in Australia and New Zealand and dedicated on continuing to drive organic growth across its 180+ storage centres, National Storage REIT achieved an A-IFRS profit after tax of $150.7 million for the half-year ended 31 December 2019.
In addition to this, NSR’s 1H FY20 underlying earnings were up by 31% and stood at $34.5 million, Underlying EPS was 4.4 cps, indicating an increase of 4.8%.
The total assets under management grew by 17% to $2.29 billion, and the net tangible assets went by to $1.77 per stapled security by 9%.
NSR believes that its performance and results thereof are a validation to the Company’s strength of the underlying assets and indicate the robustness and superiority of the management platform supporting the storage businesses throughout Australia and New Zealand.
Notwithstanding the challenging environment and economic conditions, NSR business has endured through the uncertainties in the key market to register green shoots across its business aspects.
At the expansion front, NSR acquired 14 existing storage centres, plus one new development site highlights the consistency of NSR with its strategy and remains at the forefront of the industry consolidation process.
Moreover, the Company declared an interim dividend of 4.7 cps to be paid on 28 February 2020.
FY20 Acquisitions Excluding Development Site (Source: Company's Report)
Looking at the road ahead, the Company is hopeful for enhancement to its progressive growth through significant additional capacity in key markets, through:
- Combined pipeline of over 15 new developments
- Joint ventures
- Expansions and third-party turnkey projects
Moreover, the Company successfully transacted $179 million worth of acquisitions during the period.
In a chase for EPS growth of 4%
Based on the assumption that the market conditions shall remain materially unchanged, NSR targets EPS growth of 4% and underlying earnings of $78 million. Also, the Company believes the proposed takeovers by any of the parties could likely impact the timing of revenue related to new developments, joint venture arrangements and acquisitions.
Another Real Estate player, Hotel Property Investments (ASX:HPI) placed its securities in a halt from trading in relation to a proposed institutional placement of securities. HPI has entered into agreements to acquire 100% freehold interests in -
- Gregory Hills Hotel for a consideration of $40 million, and
- Acacia Ridge Hotel for a consideration of $20 million
for a total consideration of $60 million and shall undertake a fully underwritten institutional placement to raise $30m (Placement) to partially fund the Acquisitions and associated transaction costs.
Source: Company's Report
Moreover, the Company looks forward to undertaking a non-underwritten security purchase plan to eligible security holders to raise up to $5 million for similar reason of funding the acquisitions, while the balance shall be funded from various debt facilities.
The fully underwritten institutional placement shall be issued at a fixed price of $3.23 per security and shall rank equally with existing HPI securities.
Under the securities purchase plan, the Company shall invite eligible security holders in Australia and New Zealand to subscribe for up to $30,000 in additional securities at the issue price of $3.23 per security at zero brokerage or transaction costs.
Capitalising on its ability to source acquisition opportunities, HPI seeks to monitor the market for further acquisition opportunities that are in line with its investment criteria and enhances the overall quality of its portfolio.
Also, HPI restated its FY20 distribution guidance of 20.7 cents per security, subject to the influence of the acquisitions and placement, any unanticipated event and no significant change in market conditions.
Growthpoint Properties Australia (ASX:GOZ)
With over a decade’s investment in high-quality industrial and office properties across Australia, Growthpoint Properties Australia has reported solid first-half performance and are on track to deliver our FY20 guidance, with strong business fundamentals like
- High occupancy rate,
- Long WALE,
- High proportion of fixed annual rent reviews and
- Exposure limited to the better-performing office and industrial property sectors
During the period ended 31 December 2019, GOZ had leased more than 110,000 square metres across our portfolio, and the intentions of the tenants to renew their lease agreements is an indication of the strength of their relationships.
The Company also signed a 25-year lease with NSW Police Force (largest single-tenant of Growthpoint), which is the longest lease agreement to date. Also, GOZ’s key tenants, Optus and ANZ, also extended their leases during 1H20, while the portfolio’s WALE increased to 6.4 years and a high occupancy rate was maintained.
Recently, completed A-grade office building in Richmond, Victoria, ahead of schedule and redevelopment of a 25-hectare industrial property in North Melbourne (plans submitted), are anticipated to deliver above-market returns over the upcoming couple of years.
For the road ahead, the Company restated its FY20 guidance of FFO per security of minimum 25.4 cents and distribution per security of 23.8 cents, representing growth of 3.5% over FY19.
Servcorp Limited (ASX:SRV) showcased robust half-year performance, with all key metrics higher on previous corresponding periods, like:
- Record revenue and other income of $178.8 million, up 9% on pcp;
- Underlying net profit before tax was up 47% to $21.0 million;
- Underlying net profit after tax of $16.9 million vs $11.6 million net loss after tax in the first half of FY2019;
- Increase of 20% on pcp in free cash flow to stand at $36.7 million;
Following such strong and robust performance, the Company maintained sturdy balance sheet with a cash balance of $75.9 million and no external debt at 31 December 2019.
Further, the Company declared an interim dividend of 11.0 cents per share, 25% franked and reconfirmed the FY2020 guidance of achieving net profit before tax of $36 million to $40 million and free cash to stand above $65 million.
Riding on a fair start to the business and reaching midway, SRV looks forward to maintaining its strong performance into the second half of the financial year and expects an increase in occupancies.
The Company has gained an advantage from the awareness amongst the consumers in the flexible workplace industry, and the Company remains confident about the future of the global business.
Lendlease Group (ASX:LLC)
Global property and infrastructure company, Lendlease Group made substantial progress during the 1H20 on its keystone strategy of creating the best places in key global gateway cities.
LLC grew its urbanisation pipeline significantly and completed a new world-class urban precinct and continued the sale of the Engineering business, further strengthening the business and solidifying the Company’s long-term growth.
During the period, the business:
- Added two new major urbanisation projects to its portfolio with combined estimated end development value of more than $36 billion –
- Thamesmead Waterfront in London
- A partnership with Google in the San Francisco Bay Area;
- Completed retail and residential components of Singapore’s newest lifestyle precinct, Paya Lebar Quarter delivering product worth approximately $4 billion;
- Commenced Delivery on several developments including residential apartments for sale at One Sydney Harbour, where presales have reached $1.4 billion;
- Launched Lakeshore East in Chicago;
- Entered into an agreement with Acciona Infrastructure Asia Pacific (Acciona) to sell the Engineering business for a purchase price of $180 million;
LLC witnessed a growth of 8% in its Funds Under Management to reach $37 billion, encompassing the $1.5 billion listing of the Lendlease Global Commercial REIT in Singapore.
With a continued key focus on driving security holder value, LLC looks forward to the near term commercial and residential conversion opportunities across its key urbanisation projects, some of which are anticipated to contribute to earnings during 2H FY20.
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