An increase in the fair value of investment properties has driven a spectacular increase in profits for Shopping Centres Australasia Property Group (ASX: SCP), reporting NPAT of $432.4 million in 1H22 - up by 320 per cent.
In addition, funds from operations were $94.3 million - up by 30.4 per cent compared to 1H21 - and the company now boasts an investment property portfolio value of $4.43 billion.
Anthony Mellowes, CEO of the company which owns neighbourhood and sub-regional shopping centres in Australia, said its convenience-based centres remained resilient in the half, with specialty tenants reaping the rewards of sales growth.
“Leasing spreads and cash collection rates were impacted by lockdowns in New South Wales and Victoria but improved toward the end of the half year period. We have made solid progress on our sustainability program, including commencing the rollout of solar panels on our WA assets,” Mellowes said.
“We have continued to grow our portfolio in a disciplined manner during the period, contracting to acquire seven convenience-based centres. We have also progressed our funds management strategy, announcing a new joint venture fund with GIC (named the SCA Metro Fund), and successfully winding up our final SURF fund.
“The SCA Metro Fund positions us to access relatively lower return metropolitan neighbourhoods, in partnership with a high quality and globally recognised partner, while growing asset-light management fee income.”
Chief financial officer Mark Fleming added the company’s earnings per unit forecast for FY22 is now above the pre-COVID level.
“This has been the result of solid operational performance in a challenging environment and a strong balance sheet enabling investment in acquisitions, developments and funds management,” Fleming said.
“Following the sale of assets to the SCA Metro Fund our gearing will be less than 29 per cent, 70 per cent of our debt will be fixed or hedged and we will have over $450 million of cash and undrawn facilities.”
Shares in SCP are up 3.75 per cent to $2.90 per share at 10.50am AEDT.
Dexus Convenience Retail REIT also benefits from valuation gains
Another player in the retail space Dexus Convenience Retail REIT (ASX: DXC) also benefitted from valuation gains on investment properties, with the company seeing its net profit almost double to $40 million in 1H22.
As announced today, the real estate investment trust also saw its funds from operations increase by 25.9 per cent to $15.4 million, supported by net operating income growth and the impact of recent acquisitions.
DXC fund manager Chris Brockett said the result meant the company could upgrade its FY22 guidance in December.
“Today’s results demonstrate that we continue to deliver on our strategy of providing investors with a defensive and growing income stream, as well as actively diversifying and enhancing the overall quality of the portfolio,” Brockett said.
“We remain focused on delivering value for investors over the long term through supporting our tenants to meet their future requirements, particularly by enhancing their sustainability endeavours at their sites, and leveraging our development capabilities to unlock additional value within the portfolio.
“We continue to maintain a disciplined approach to capital allocation, including adhering to strict investment criteria for potential acquisitions while remaining opportunistic regarding property sale opportunities and capital recycling.”
Following six acquisitions in the half, DXC’s property portfolio now includes 112 assets valued at $803 million.
Shares in DXC are up 0.88 per cent to $3.45 per share at 10.44am AEDT.
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