Announcement
HALFYR: APL: Building on a new strategy
08:43am
APL
29/11/2019 08:43
HALFYR
PRICE SENSITIVE
REL: 0843 HRS Asset Plus Limited
HALFYR: APL: Building on a new strategy
NZX release
Building on a new strategy
29 November 2019
Asset Plus Limited today announced its interim financial results for the six
month period ended 30 September 2019, reporting profit and total
comprehensive income after tax of $2.01 million, down from $3.20 million in
the prior corresponding period (pcp).
Adjusted funds from operations (1) reduced by $0.76 million to $2.02 million
as a result of due diligence costs incurred. Operating performance over the
period was steady on a like for like basis for the three existing assets.
The partial impact of the Graham Street acquisition offset the AA Centre
divestment in the pcp which resulted in an increase in total operating income
to $3.56 million from $3.15 million.
Asset Plus Chairman, Bruce Cotterill said "The last six months has been a
period of active due diligence with a focus to secure acquisitions with
future value-add potential. The 35 Graham St acquisition was the first step,
but other opportunities continue to be sought."
Other key points from the period are:
o An interim net dividend of 0.9 cents per share has been declared
o Portfolio occupancy is 98.0% which increased from 96.7% over the six months
due to the Graham Street acquisition
o The WALE (2) is 4.2 years which is decreased from 5.5 years at 31 March
2019 due to the acquisition of 35 Graham Street (3).
o Loan to value ratio is 38.2% (8.5% at 31 March 2019).
o Net tangible assets (NTA) of 69 cents per share was maintained over the
period.
o $59.2 million of debt was drawn to fund the 35 Graham Street acquisition.
Strategic update
The Board is committed to growing the portfolio in a disciplined manner, with
a primary focus to close the gap between the share price and NTA.
The 35 Graham Street acquisition fits within the Asset Plus "value-add"
investment strategy as not only does the purchase price represent a strong
initial yield of 6.85% in the near term, the property has considerable
potential for a re-positioning at the end of the two-year lease term. The
future development feasibility and scope of works is well underway, and a
leasing agent has been appointed to pursue pre-leasing opportunities.
The divestment of the Heinz warehouse in Hastings settles on 17 December 2019
and will provide debt headroom to facilitate further acquisitions. This asset
was identified as non-core as it no longer fits the company strategy.
During the period management undertook significant due diligence on material
opportunities.
Bruce Cotterill says "Value-add opportunities require significant due
diligence. The size and complexity of these transactions require a thorough
and robust programme of diligence. To date no transaction has been secured
but the management team remain focused on potential opportunities."
Portfolio update
Steady progress has been made at Eastgate in Christchurch and Stoddard Road
in Mt Roskill. Both assets provide a running yield in the near to medium
term. Occupancy has been maintained at 100% at Stoddard Rd.
The search for a further anchor tenant at Eastgate remains a focus and in
recent times there have been some promising leads in attracting prospective
tenants.
Financial result
Profit and total comprehensive income after tax for the period ended 30
September is $2.01 million ($3.21 million in the prior corresponding period
(pcp)).
Adjusted funds from operations of $2.02 million were recorded ($2.78 million
in the pcp). The current period was impacted by $0.83 million of due
diligence and transaction related costs.
Net rental revenue from the property portfolio was up $0.21 million to $5.03
million. Higher net rental income was due primarily to the acquisition of 35
Graham Street in June 2019, was offset by the sale of the AA Centre in June
2018.
The reported tax expense is $1.08 million higher as in the pcp there was a
release of the deferred tax liability of $1.0 million relating to AA Centre.
Balance Sheet
$69.7 million of debt is currently drawn which represents an LVR of 38%
(March 2019 8.5%).
NTA is 69 cents per share which is unchanged during the period.
No independent revaluations were completed during the period as the Directors
determined there was no material movement over the 6 months.
Dividend
A quarterly dividend of 0.9 cents per share has been declared, with the
record date set for 11 December 2019 and payment on 18 December 2019.
The dividend is maintained at the current level but is subject to quarterly
review and ongoing assessment considering potential future transactions.
While this equates to a pay-out ratio of 144% of AFFO, the dividend level was
retained as the Board considers the due diligence costs incurred to be part
of the Company's growth ambitions. The pay-out ratio is reduced to 102% if
these costs were not incurred during the period.
The dividend is expected to be maintained at the current level but is subject
to quarterly review and ongoing assessment considering potential future
acquisitions.
Outlook
Mark Francis, Managing Director of Augusta commented "Augusta is now focused
on the 35 Graham Street redevelopment opportunity. Pre-leasing is a critical
element to this process."
"The search for new opportunities continues and Augusta is confident in being
able to secure these in the near term as the Company requires scale to set a
stronger platform for growth."
The Board is pleased with Augusta's performance as manager and the progress
they have made on formulating and executing a new strategy for the Company
which it hopes to provide for sustainable growth over the longer term.
(1) Adjusted funds from operations (AFFO) is non-GAAP financial information
and is a common investor metric, calculated based on guidance issued by the
Property Council of Australia. Asset Plus considers that AFFO is a useful
measure for shareholders and management because it assists in assessing the
Company's underlying operating performance. This non-GAAP financial
information does not have a standardised meaning prescribed by GAAP and
therefore may not be comparable to similar financial information prescribed
by other entities. A reconciliation of the net profit after tax to AFFO is
included in the interim results presentation on slide 14 which has not been
independently reviewed by the auditors.
(2) Weighted average lease expiry
(3) On the divestment of the Heinz Watties distribution warehouse in December
2019 WALE will reduce to ~3.5 years
ENDS
For further information please contact:
Bruce Cotterill
Chairman, Asset Plus Limited
021 668 881
Mark Francis
Managing Director
Augusta Funds Management Limited, manager of Asset Plus Limited
(09) 300 6161
Simon Woollams
Chief Financial Officer
Augusta Funds Management Limited, manager of Asset Plus Limited
(09) 300 6161
End CA:00345140 For:APL Type:HALFYR Time:2019-11-29 08:43:49
Click here
to view related attachments.
