Archive | Gainz

Sky half-year profit up 19.6%

Adelaide boosts gross, but eps also well ahead

Casino owner/operator Sky City Ltd continued its high-growth path with big rises in profits and earnings per share on revenue up 48.5% following the Adelaide Casino acquisition.

The result for the December half shows revenue at $213.7 million, pretax operating surplus up 22.3% to $51.4 million, after-tax surplus up 19.6% to $33.2 million, earnings per share up 18.4% to 34.1c and interim dividend up 4c to 28c.

Managing director Evan Davies said a concentrated effort to deliver enhanced product, service and entertainment experience resulted in higher visitor numbers and spending ratios.

Adelaide Casino made its first contribution to Sky’s coffers, $53 million in revenue and steady ebitda of $10.4 million, while Sky City Auckland revenue rose 9% to $157 million. The Australian casino is being refurbished and will be relaunched in April.

Auckland gaming revenue rose 12% to $130 million, visitation rose 2% to 12,650 customers/day, and spend/customer rose 10% to $64.

Sky City Hotel occupancy rose from 76% to 78% despite the city’s oversupply of hotel rooms. Tower visitors (excluding Orbit restaurant visitors) fell by 20/day to 1270/day.

Continue Reading

Retail sales up 11.3% in April, 9.3% excluding cars

Auckland retail sales average $1.3 billion/month this year on 10%-plus rises

Retail sales rose 2.6% (seasonally adjusted) March to April, according to Statistics NZ on Friday. Excluding the car trade, the rise (seasonally adjusted) was 1.7%.

But the seasonal adjustment was hard to make, Statistics NZ said. The widespread growth could be attributable to Easter, with both Good Friday & Easter Sunday falling in March, cutting March trade and increasing April’s trading days. Because the last time Easter fell in March was in 1997, the impact of these extra trading days was hard to quantify.

As I’ve written before, I don’t like Statistics NZ’s seasonal adjustments for the building industry, which is better compared against the same period of the previous year. And I’m wary of seasonal adjustments when you’re told the adjustment is hard to quantify.

So, back to the actual figures — and, for March-April, perhaps a look at 2 months together over 3 years.

The Statistics NZ website shows lots of these figures very quickly, and helps you if you don’t have the software to read the pages. The retail statistics have a subtotal excluding vehicle sales & services, and an all-stores total. The vehicle services figures were outrageously high through much of 2000-01 (a 24.7% rise in August 2000 over August 1999 was the biggest shift) before falling back to 3 monthly falls at the end of 2001 and rises of less than 3% in the first quarter of this year.

Car trade booming

But in April 2002 vehicle services, like many other retail categories, were well up. Vehicle services rose 7.3% on April 2001, and car sales were up 26.7% (ahead of a change in rules affecting older Japanese imports).

Nationally, car sales rose $129 million to $610 million, April compared to April. In Auckland, the rise was $40 million to $215 million.

Excluding car retailing & services, March sales rose $179 million to $2.914 billion, up 6.6%, and April sales rose $243 million to $2.854 billion, up 9.3%. Including the car trade the overall sales for April rose 11.3% to just over $4 billion.

Combining the 2 months’ figures so the timing of Easter doesn’t matter, the total retail trade was worth $7.552 billion in March-April 2001, rising to $8.21 billion this year, an 8.7% increase.

In Auckland, retail sales were worth about $1.1 billion/month in 2000 (and another $300 million at Christmas), mostly above $1.2 billion through 2001 ($1.585 billion in December), and averaging $1.3 billion in the first 4 months of this year, with monthly rises above 10% 3 times & 5.6% in March.

Continue Reading

Fletcher signs proposal to sell 100,000ha of forests for $685 million

Campbell Group says it’s been earning 16%-plus from forests for past 10 years

Fletcher Challenge Forests Ltd has signed a letter of intent to sell its entire forest estate to The Campbell Group LLC for $685 million, a 42% premium on Fletcher’s sharemarket valuation before it announced in June it intended to sell its forests.

The deal includes all Fletcher’s forest land, crop, associated assets & working capital. The proposal requires Overseas Investment Commission and shareholder consent.

Fletcher announced a $728 million forest carrying value (net of tax & minorities) last week, but said “the difference reflects the price for the early realisation of value for shareholders, compared with an on-going ‘in use’ value to be realised over time.”

Fletcher wants to complete the sale by Christmas. It intends to return $1/share to shareholders, leaving it with 42c/share net asset backing ($234 million, based on historical cost, including only $24 million for its US distribution business), and would then concentrate on debt-free marketing, manufacturing & distribution businesses. It would also change its name.

Chairman Sir Dryden Spring said that, “given the strategic significance & earnings potential of these businesses (earnings of $14 million in each of the last 2 years), the company believes their market value to be significantly above their carrying value.”

Fletcher has 108,500ha of planted forests. It sold cutting rights to 8940ha to UBS Timber Investors for $US65 million in January.

Campbell, based in Portland, Oregon, manages forestry assets valued at $US1.4 billion and says on its website its 9 “tree farms” covering about 300,000ha in Washington, Oregon & California have generated better than 16% average annual returns over the past 10 years.
Websites: Fletcher Challenge Forests
The Campbell Group
Websites: Fletcher Challenge Forests
The Campbell Group

Continue Reading

Trans Tasman cans tower, says building wouldn’t be viable

Not worth it at 9% return on cost, says Catley

Trans Tasman Properties has canned its plans for a 19,000m² office tower between Fort and Shortland Sts — for the moment.

The development would have been competing head-on with AMP NZ Office Trust’s PricewaterhouseCoopers Tower on the waterfront and with the tail end of leasing for Kiwi Development Trust’s Royal SunAlliance Centre, two doors up Shortland St.

Trans Tasman was close to getting the leasing precommitment — 60% in financial terms, compared to a requirement of 70% — but decided not to proceed because it was not a viable proposition.

“We’ve been mulling over this decision for about a week and a half,” leasing manager Bruce Catley said today.
“We got to a point where Simpson Grierson wanted to sign the lease. We basically said building a new office building in this market is not viable.”

Mr Catley said it was not about rents, but about value growth and the return on investment. “If you crank the rents [for example, by using subsidies to get a higher face rent, or by somehow achieving above-market rents] it’s not reflected in the valuation. The valuers just take a market rent, and each year that over-renting goes off the valuation.”

Because of the poor perception of property as an investment, evidenced by discounting of property sector share prices, Mr Catley said Trans Tasman would have to offer rates of 10-12% to raise money for a new building. “Why spend $85 million building a new office building when at the end you’re getting a 9% return on cost?”

Although precommitment was good, with Simpson Grierson the likely anchor tenant although AMP was also still taking to the law firm, Mr Catley said it was tenanting of the last few floors that could take the returns down — especially in a competitive market. “For the last 4-7 floors, you’re generally going to pick up half-one floor tenants. When two buildings are going up at the same time, they’re just competing with each other. You never do as well with the last few.”

He said AMP was an important factor because its reasoning for development was different. Its trust needed to have a modern building for its image as the equity with the best cbd profile — when the waterfront tower is completed, the present flagship, the ANZ Centre (ex-Coopers & Lybrand/PricewaterhouseCoopers), would be 11 years old. It has also started construction.

“AMP are a little bit more desperate than us. They’ve signed unconditional leases with PricewaterhouseCoopers and Buddle Findlay, so they have to go.”

(More to come on this subject over the weekend.)

Continue Reading

No Trans Tasman meeting required for Australian Growth portfolio sale

Surveillance panel says Trans Tasman must tell shareholders of possible consequences

Trans Tasman Properties Ltd doesn’t have to hold a meeting of shareholders before its Sydney-based subsidiary, Australian Growth Properties Ltd, sells 80% of its portfolio.

But the Australian company is required to hold such a meeting under Australian Stock Exchange rules, and the waiver agreed to by the New Zealand exchange’s market surveillance panel has been granted on condition that a meeting of AGP shareholders in held.

The panel also requires that Trans Tasman tell its shareholders of the requirements of the ASX rules, how it intends to vote (it will vote for the transaction) and – most importantly – tell them of possible consequences of the transaction.

No indication yet of proceeds’ use

Neither Trans Tasman nor Australian Growth has indicated yet what is likely to be done with the sale proceeds.

Trans Tasman required a waiver from holding a shareholder meeting because it holds 50.1% of Australian Growth, the book value of assets to be sold is $A385 million, and Trans Tasman’s $A197 million share of this exceeds 50% of its $NZ170 million average market capitalisation. The transaction represents 46% of Trans Tasman’s assets.

The controlling interest of SEA Holdings Ltd of Hong Kong in Trans Tasman (55.2%) and through that a controlling interest in Australian Growth, means a vote at either company is a fait accompli.

SEA can avoid holding a meeting of its shareholders if it has written approval for the transaction by more than 50% of its shares by value – which it does. Its major shareholders own 51.6% of SEA.

Germans buy at 6% yield

Australian Growth has a conditional agreement to sell its properties at 363 & 345 George St, and 24 York St, Sydney, to German fund manager Deka Immobilien Investment GmbH for $A397 million (net $A385.7 million, giving an $A300,000 gain over book value). Guaranteed income support totalling $A6.9 million will be given for 3 years for part of the property.

The current income yield of the properties at book value is 6%.

Australian Growth said the sale would enable it to eliminate its $A200 million revolving loan facility, of which $A151 was drawn down, and leave 78% of it assets as cash or cash-equivalent. Its main remaining assets would be $A74 million of property & property-related investments and net cash $A266 million (minus $A9 million for dividends) for a total $A340 million, versus $A26 million of liabilities, for a net position of $A314 million.

Australian Growth had combined income tax & capital losses of $A109 million at the December 2002 balance date. Capital gains from the sale would take $A72 million, so no tax was likely to be payable on the sale.

Duty to sell at right time, says board

Australian Growth’s board said it was “incumbent on a property development & investment company to time the sale & purchase of assets to maximise returns. The directors believe it is appropriate to sell these assets at this time.

“The directors do not believe total returns from these properties in the short to medium term will be adequate to meet profit expectations of shareholders.”

On the use of proceeds, the board said it had retained corporate advisory firm Caliburn Partnership to undertake a strategic review. No time frame was given for consideration of the group’s options.

SEA has outlined the whole proposal and its impacts in a pdf file on its website, which can also be seen on Trans Tasman’s website.

Continue Reading

One law for retirement villages, says Securities Commission

Securities Commission wants a regulation (with submissions first)

The Securities Commission wants to regulate so all retirement villages will have to issue a prospectus, even if they offer a property title.

The commission issued a short discussion paper today. It said that because any law change will be some time off, it was considering possible interim proposals to allay investors’ concerns, but regulation to overcome exemptions under section 5 (1)(b) and (f), which enable promoters to avoid issuing a prospectus or appointing an independent trustee or statutory supervisor, was the only one mentioned.

The commission invites comments on this proposal, to reach the commission by 12 July (see the commission’s details on this website’s external links page, Government section).

The issue has been a thorn for the retirement village industry for years, and the Securities Commission has always supported the view that promoters should issue prospectuses, even where they offer land and unit titles.

An industry task force recommended in 1993 that all retirement villages should be subject to the Securities Act, in a report published by the Securities Commission, which at that time made no recommendations.

The commission was trying, in late 1993, to convince the developers of a Whangaparaoa retirement village, Garry and Wendy Crawford, to comply with the Securities Act provisions, and in November 1993 decided to ban advertising by Crawford companies. The Crawfords sold their interest in the village in 1994.

Another operator, Ian Anderson at Culverden, resisted the prospectus requirement and fought through to a 1997 Privy Council decision. In that case, a buyback obligation brought it under the act.

The latest to resist the commission is Ryman Healthcare, which was listed last year and offers investors the security of title, which comes under the Land Transfer Act and the Unit Titles Act.

The Law Commission recommended last year, in its Report 57, that all retirement village schemes be subject to a single set of rules, and the Securities Commission went along with this view today.

The Securities Commission considered starting proceedings in the High Court to clarify the issue on Ryman’s method, then decided not to, citing the long Culverden case, resources committed to that and Ryman’s own extensive legal advice (which reaches a contrary view).

Instead, the commission decided that regulation could do the trick, so securities gaining the section 5(1) exemption would become subject to the act anyway.

But it says there will need to be public consultation first, thus prolonging the agony of decision-making.

Says the Securities Commission: “Any action under the proposed new power would, we suggest, be preceded by public consultation, which would enable the Government to take an informed decision on any proposal to regulate.

“Moreover, it would afford us the opportunity to consider the type and extent of disclosure to be required of all retirement village schemes, and whether to review the current class notice for retirement villages to ensure that all terms and conditions of exemption remained appropriate.”

The Securities Commission then uses a note by the Law Commission to back its desire for regulation, a proposal the Securities Commission had felt unable to make formally in the previous seven years:

“We consider the following characteristics of investment in retirement village schemes mentioned by the Law Commission in its Report 57 reinforce the case for such a new regulation making power: the age and vulnerability of many potential investors/residents, complexity of contracts, difficulty in assessing the risks involved.”

Ryman’s view

Ryman, apart from getting its own legal advice on the subject, co-operated with the Securities Commission in its preparation of this review. But it still finds the commission’s outlook is at odds with reality.

“They concentrate on disclosure, not security. We think they’ve got it the wrong way round,” Ryman Healthcare joint managing director John Ryder said today.

And he said the trouble with regulation was that the things being regulated change. “We think, if there’s something wrong with the act, change the act.”

Continue Reading

Westfield America’s profit up 38%

Portfolio grows 11% to 66 centres worth $US10.9 billion

Westfield America Trust increased net profit by 37.9% to $A596.8 million in 2003, on trading revenue up 12.7% to $A1.873 billion, revenue from asset sales up 21.1% to $A448.1 million, and pretax profit of $A628.7 million.

The distribution to unitholders (net of tax & $A23.9 million of capital profits retained) has been increased by 19% to $A572.9 million, and by 5.3%/unit to A16.11c/unit.

Westfield America wrote off $US7.7 million for its failed Taubman Centres bid, but that’s petty cash when compared to the $US1 billion of assets it added to its portfolio in 2003, buying 5 centres to increase its presence in San Francisco, Chicago & Tampa.

The trust now has 66 shopping centres worth $US10.9 billion, up 11.2%, generating retail sales of $US15 billion/year. Revaluations at 24 centres added $US292.1 million to the portfolio. The portfolio value shrank 15.6% to $A14.6 billion on conversion (the conversion rates were US56.6c/$A1 in 2002, US74.9c/$A1 in 2003, a 32.3% shift).

Net asset value rose 8.5% in US dollar terms, from US94c to $US1.02. In Australian dollars, asset backing fell 18.7%, from $A1.66 to $A1.35.

Equity rose 15.6% in US dollars, to $US3.7 billion, but fell 10.7% on conversion, to $A5 billion. Gearing was cut from 46.5% to 44.8%.

Westfield America spent $US204 million on Shoppingtown capital projects in 2003 and has another $US770 million of projects under way, including 6 major redevelopments. It’s about to start work on 3 major expansions and has identified another 8 projects to start by the end of 2005. Those 11 projects will cost $US1 billion.

Continue Reading

AMPAM sells portfolio management to JLL

AMP relinquishes role, says investment management is its forte

AMP Asset Management (AMPAM) has relinquished its property management role to concentrate on managing investment.

Jones Lang LaSalle will take over management of the $900 million property portfolio from 31 July.

AMPAM’s acting head of property, and general manager of the AMP NZ Office Trust, Anthony Beverley, said today AMP had spent two months evaluating the property services market and reviewing the capacity of the major providers before awarding the three-year outsourcing contract to Jones Lang LaSalle.

All existing AMPAM staff have been offered positions at Jones Lang LaSalle under their current terms and conditions.

AMPAM contracted out the facilities management and maintenance services of its property portfolio last year. Mr Beverley said AMPAM Property’s core role was property investment, so by contracting out the management it could concentrate on adding value.

This contract increases by nearly 50%, to $3 billion, the property Jones Lang LaSalle has under management.

Continue Reading

Urbus sells 3 Wellington properties

Sales cut debt to 38.8%

Newly listed diversified property investor Urbus Properties Ltd has sold 3 Wellington office properties for $23.4 million, $750,000 above their book values.

The 3 properties are the ANZ DayNight House at 175 The Terrace, Asteron House (previously known as Royal & Sun Alliance House) at 139 The Terrace and a small property at 191 High St, Lower Hutt.

Chief executive Murray Barclay said the sales were in line with the company’s strategy of reducing its profile to the Wellington office market.

Last month it confirmed the sale of another of its Wellington office properties at 47 Boulcott St for $6.3 million, $100,000 above its book value, and the purchase of 2 Auckland industrial properties for $9.4 million.

Mr Barclay said the current property environment was proving beneficial to Urbus in helping to achieve good prices for its Wellington properties.

However, Urbus perceived the Wellington office market as having to face a significant number of challenges, including increasing insurance premiums, over-renting, building operating expenses & loss of major tenants. These factors were all impacting on returns owners were receiving.

Proceeds from these sales will be used to reduce bank debt to around $145 million, or a loan to value ratio (lvr) of 38.8%. The company’s targeted lvr is between 35 -40%.

Mr Bqrclay said these sales would also reduce Urbus’s portfolio over-renting from 3.8% to 2.9%, provide a sustainable level of earnings/share and position the portfolio for growth as rental levels increase.

“Significant progress has been made this year in positioning the portfolio for rental growth through divesting over-rented & non-core properties,” Mr Barclay said.

Urbus was listed in July and joined the NZSX 50 index on 1 September. The company said its current forecast dividend of not less than 9c/share remained sustainable into the foreseeable future.

Following the sale of the 3 Wellington properties, Urbus’ portfolio statistics will have a sector mix of industrial 36% (target 40%), retail 42% (target 40%) & office 22% (target 20%). It has reached its geographic target of 65% in Auckland, has 10% in Wellington (target 15%), Hamilton 9% (target 10%) , other North Island 16% (target 10%) .

Urbus now has 54 properties valued at $374 million. The sales will maintain the portfolio’s average lease term at 5 years.

Continue Reading

Golden Gate supermarket company wound up

Judge finds payment prospect elusive

Golden Gate Supermarket & Wholesalers Ltd (Samuel & Helen Wang, also directors of Golden Gate Supermarket (Group) Ltd) was wound up by Justice Hugh Williams in the Auckland High Court on Thursday on the application of Inland Revenue, despite opposition from the company and from Commercial Factors Ltd (Terry Haydon), which wanted to keep the company alive to complete the sale of a hotel property in Tonga.

But Inland Revenue’s lawyer, Tracy Spencer, said the company had not put a proposal to Inland Revenue by 1 February, as required by Master Tomas Kennedy-Grant, hadn’t provided a statement of financial position, had put 2 subsequent proposals which were rejected immediately, and continued to mount up tax debt, starting with $90,000 of PAYE payments but now over $130,000, including fringe benefit tax, ACC employer levies & penalties.

“This is the third statutory demand that the commissioner has issued, and in each case the payments have been made in dribs & drabs so they’re not current.”

Soane Foliaki, for Golden Gate, said the company believed just over $100,000 had been misappropriated by a former manager. But he said the Tongan hotel was three-quarters built, was a valuable property, & an undertaking could be given for the NZ Inland Revenue to be paid first from the development.

Mary Tuilotolava, for Commercial Factors, said Mr Haydon would give Inland Revenue a personal undertaking to pay the IRD from the proceeds he expected to receive from a $15 million deal with a Macau party.

Mr Foliaki said the Wangs had invested $3 million in the Golden Gate business off Teed St in Newmarket in 3 years. “The stock is worth more than this debt,” he said.

Justice Williams said the assurances were unsupported by any evidence fro the company, its directors or supporters. The best that could be said for the company was that its affairs were “in some confusion.” The judge said the prospect of payment was “elusive.” Rejecting the application for a 6-week adjournment, he ordered the company wound up and appointed Steve Lawrence & Brendon Gibson (Ferrier Hodgson) as provisional liquidators.

Continue Reading
WordPress Appliance - Powered by TurnKey Linux