Investa Office Fund (ASX: IOF) – Edged lower with FY18 results announcement

Investa Office Fund announced its results for the financial year ending 30 June 2018. The performance results of ASX listed Fund reported 12 months unlevered Portfolio Return of 15.9% which has supported the company to deliver 18.4% of Return on Equity.

The company’s Net profit for the period attributable to members rose by 10.6% to $521.6 million for the fiscal year 2018. It is sharply due to revaluation uplifts of $399.2 million including $2.3 million valuation uplift recognized from conditional sale agreement of 836 Wellington street in Perth. The valuation gains in the company’s balance sheet also resulted in escalating the Net Tangible assets per unit by 14.2% to $5.47 from $4.79 per unit in FY17.

IOF’s Funds From Operation (FFO) per unit were up by 3% to 30.6 cents compared to 29.7 cents in previous corresponding year. The incremental shift in company’s underlying earnings is mainly driven by like-for-like FFO growth of 3.6% together with a 2.5% buy-back of units undertaken during the first half of the financial year 2018. As Investa’s Gearing rests below the Fund’s target range of 25%-35% to 23% as on June 30, 2018, it gets the potential to support anticipated development and reimbursement expenditure.

While weighted average lease expiry (WALE) reduced from 5.1 years at 30 June 2017 to 4.9 years at 30 June 2018, company’s portfolio occupancy remains the same at 97%. $125 million of Australian dollar denominated Medium Term Notes were repaid on expiry and an additional $300 million of new bank debt facilities were installed with terms of four and five years. Company’s total leasing commitments increased to 84% while the development of Barrack Place in Sydney remains under company’s target for completion in October 2018. In progress to achieve Net Zero by 2040, company reported reduction in carbon emission intensity by 8%. FFO guidance for FY19 is 29.2 cents per unit, down 4.6% on FY18, and this was one trigger to the slight slip in the stock price.

Following the above update, IOF traded at a stock price of $5.160, down by 0.193% on 08 August 2018.

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