SCA Property on the hunt for more bargains

SCA Property on the hunt for more bargains

The coronavirus may have eaten a hole in its revenue, but convenience shopping centre owner SCA Property Group (ASX: SCP) has flagged a bullish desire to snap up more assets in the coming months.

The Sydney-based group holds a portfolio of 85 Woolworths- and Coles-anchored neighbourhood shopping centres with a mix of convenience-focused speciality stores.

In a statement to the ASX the group said collection rates were going better than previously predicted, with receivables collected up almost 50 per cent on prior estimates.

As at 30 June 2020, the company only expected to recoup $7 million of $22.3 million in receivables and had factored in a credit loss provision of $15.3 million.

However, it managed to collect $10.4 million by the end of the September quarter.

While SCA conceded it was unlikely its cash collection rates would return to pre-COVID levels until state governments relaxed leasing codes of conduct across the country, it set a wolfish tone when it came to future buys.

"On 30 September 2020 we completed the acquisition of Bakewell NT for $33 million (excluding transaction costs) representing an implied fully let yield of 7.2 per cent," the group said.

"While cap rates for neighbourhood centres have compressed, we continue to assess a number of acquisition opportunities and remain confident of completing more acquisitions during FY21."

Management highlighted a strengthened balance sheet, including around $340 million in undrawn debt and no debt until December 2022.

As at the end of FY20 the group had a warchest of $622.8 million including cash and undrawn debt at its disposal to increase its footprint in a tight marketplace. 

The group also flagged an optimistic sales growth forecast, stating sales growth was bouncing back outside Victoria as government restrictions eased and the trend toward customers shopping locally continued.

"There are now only three specialty tenant categories experiencing sales declines compared to the same period last year, which are apparel, cafes/restaurants and hairdressing/beauty," he said.

"Nationally, 92 per cent of our tenants (by number) are open and trading, with 60 per cent open and trading in Victoria and 99 per cent open and trading in the rest of Australia."

The outfit not only intends to buy more companies, but it will also be giving more distributions to shareholders, to the tune of 5.7 cents per unit (cpu) in the first half of FY20, up 3.6 per cent on the previous 5.5cpu.

Never miss a news update, subscribe here. Follow us on Facebook, LinkedIn, Instagram and Twitter.

Business News Australia

Get our daily business news

Sign up to our free email news updates.

Please tick to verify that you are not a robot

 

Help us deliver quality journalism to you.
As a free and independent news site providing daily updates
during a period of unprecedented challenges for businesses everywhere
we call on your support

Top tips for successful digital transformation
Partner Content
Digital transformation, when done well, can transform your organisation's operation...
Advertisement

Related Stories

Early-stage funding hits record high as mega-deals drop off

Early-stage funding hits record high as mega-deals drop off

Despite venture capital funding falling by a third for Australian s...

The Star hit with two more shareholder class actions

The Star hit with two more shareholder class actions

Law firms Phi Finney McDonald and Shine Lawyers (ASX: SHJ) have ser...

Long-term Transurban CEO departs as company posts record revenue and earnings

Long-term Transurban CEO departs as company posts record revenue and earnings

After almost 11 years at the helm of toll road operator Transurban ...

Cettire sashays to an $8m profit as luxury goods prove resilient in tough times

Cettire sashays to an $8m profit as luxury goods prove resilient in tough times

Specialist online retailer Cettire (ASX: CTT) is proving that luxur...