Australand (ALZ) was again the first real estate investment trust to produce an earnings report for the June 30 period yesterday, and it will probably the last time its occupies that industry- leading position on the ASX with the $2.5 billion takeover by a Thai-controlled Singapore company heading for success.
Australand’s interim result not only matched the upgraded earnings guidance issued in May by the company, it confirmed that Frasers Centrepoint, the bidding company from Singapore, has probably got the company at the right time in the earnings cycle – just ahead of a sustained upturn in earnings, thanks to the still emerging home building boom in Australia.
Australand reported a 49% lift in net profit and a 30% rise in operating profit after tax for the half-year, despite a 15% fall in revenue.
Distributions per stapled security were 12.75c, up from 10.5c.
Australand said its residential division lifted operating earnings before tax to $30.7 million for the half-year from the $22.3 million for the same period a year earlier.
And its commercial and industrial division reported an $8.2 million EBIT result for the half-year.
The group was required to settle a dispute over its fees in 2007-08 with the Tax Office, costing the group $6.4 million in in the current financial year.
The group upgraded its earnings guidance in May and earnings per security for 2014 were expected to increase 20%-25% on 2013.
And if the current strength in the residential market is sustained, Australand saw earnings per security growing 10% to 15% from this year to the end of 2016.
ALZ YTD – Residential lifts Australand result
Australand is set to be taken over by Singaporean-listed Frasers Centrepoint.
Frasers approached Australand in early June with an offer for a cash consideration of $4.48 per Australand stapled security.
That offer came after Stockland’s unsuccessful takeover bid in April, which was made after it had acquired a 20% stake in Australand in March from the former Singapore parent, Capitaland.
Australand’s Managing Director Bob Johnston said in yesterday’s earnings release, "The Group has delivered a significant increase in profit in the first half which demonstrates the resilience of the Group and ongoing strength in the residential sector.
"Our industrial and office investment portfolio continued to grow its earnings contribution, driven by comparable rental growth and additional income from internal developments which were completed in 2013.
"Residential earnings are up strongly reflecting favourable market conditions and the performance of key projects during the half. Contracts on hand are in a very healthy position securing a significant amount of earnings for delivery in the second half," he added.
Mr Johnson pointed out that the current guidance could change if Frasers gets more than 50% of the company’s securities in its offer.
He reminded investors that Frasers said that they will review the company from top to tail and that in turn could affect the guidance.
