Singapore-dominated property developer Australand (ALZ) says it expects to deliver growth in earnings for 2014 and is aiming for distributions to edge up to 22c per security, up from 21.5c in 2013.
It said it will focus on delivering existing residential projects and working through leasing its commercial assets this year to achieve the higher annual distribution.
The company said the 2014 year will see a second half boost because of the way residential settlements will fall.
The company’s securities ended up half a per cent at $3.93.
As the company warned in November last year, its 2013 results were hit by write-downs taken on a number of commercial, industrial and residential projects, resulting in a full year statutory result of $135.3 million.
That compared to $180 million last year, but at the operating profit after tax level, it was a 4% rise to $147.9 million, when compared to the previous corresponding period.
The property developer announced an impairment of approximately $65 million would be taken as at December 2013 following a review of the inventory-carrying values of its residential, commercial and industrial development assets in November. That was despite rising property prices, especially housing.
ALZ 1Y – Australand confirms write-downs
CEO Bob Johnston said while business confidence has improved, operating conditions in the commercial and industrial sectors are expected to remain challenging for 2014.
He said office leasing activity remains relatively subdued and the occupancy of the group’s investment portfolio has reduced reflecting these conditions.
The main two projects for lease are 357 Collins Street, Melbourne and Rhodes in Sydney.
”Investment appetite for well leased assets, however, remains strong and is expected to underpin valuations despite the softer underlying fundamentals,’‘ he said.
”The residential sector continues to benefit from the current low interest rate environment and strong investor appetite, particularly in Sydney and also now evident in the other capital cities," Mr Johnston said.
He declined to comment on continuing market speculation about the possible float of its residential business, telling analysts that, ”We don’t want to shrink the business and while we consider all possibilities, we don’t make any comment”.
”In December 2012, the Group announced that it had received a highly conditional proposal from GPT to acquire the group’s investment property and commercial and industrial businesses,” Mr Johnston said.
”After detailed consideration, the proposal was rejected by the Australand Board. Subsequently, CapitaLand Limited, (which owns 39.1%) the Group’s largest security holder, announced in January 2013 that it was undertaking a strategic review of its investment in Australand.
”However, no proposal was able to be developed that was superior to business as usual. Accordingly, the Australand board decided to conclude the process and continue with the execution of the Group’s previously stated strategic objectives.”
Capitaland sold down its holding to 39.1% level late last year by placing securities with local investors.
