Despite the market downturn arising from the Covid-19 pandemic, Argosy Property Ltd chair Mike Smith said today the company had significant opportunities through its value-add properties plus its development pipeline.
This story contains more comment and a lot more statistics on Argosy’s performance than the brief item posted earlier today, which noted that net profit fell 10.9% in the year to March – before the Covid-19 pandemic’s full effect.
Mr Smith made his comments in the review accompanying Argosy’s annual result, saying: “Argosy’s ‘create, manage, own’ strategic framework will continue to guide our overall long-term goals, together with Argosy’s investment framework. The board’s message to stakeholders is to look through the near-term challenges we are facing. There is significant opportunity, with our value-add properties & development pipeline, to position Argosy well for the future. In the meantime, we continue to work with all our stakeholders to ensure we come through Covid-19 in good shape.”
Mr Smith said Argosy’s business was resilient & supported by a sound capital & portfolio position. Accordingly, based on current projections for the portfolio, the board had confirmed expectations of a 6.35c/share full-year dividend for the year to March 2021.
Chief executive Peter Mence said Argosy had provided some assistance to tenants since 31 March to counter the impact of lockdowns, primarily via deferrals or rent abatements: “Including the Albany Lifestyle Centre, Argosy has provided for about $2.8 million in rent abatements for April & May (since year end), for tenants most in need.”
Highlights for the financial year:
Net distributable income, up 3.8% to $59.6 million
Net distributable income/share, up 3.75% to 7.2c (6.94c)
Portfolio occupancy, 98.8% (97.8%)
Weighted average lease term, 6.1 years (6.14 years)
Full-year unrealised revaluation gain, $60 million, up 3.5% on book value
Strong portfolio leasing outcomes, particularly in Wellington, with 7WQ now 82% leased to the Crown
Further debt diversification via a second successful $100 million 7-year green bond issuance
Net tangible assets/share, up from $1.22 to $1.30
Dividend guidance, 6.35c/share.
Investment properties, up 9.4% to $1.82 billion ($1.67 billion)
Net property income, down 2.6% to $99.7 million ($102.5 million)
Revaluation gains, down 14.9% to $59.94 million ($70.46 million)
Pretax profit, down 13.5% to $123.85 million ($143.25 million)
Net profit after tax, down 10.9% to $119.1 million ($133.7 million)
Earnings/share, down 10.9% to 14.4c (16.16c)
Revaluations by sector:
Industrial, up 13.4% to $53.4 million ($47.1 million)
Office, up 1150% to $19.5 million ($1.86 million reduction)
Large-format retail, down 151.5% to $12.99 million reduction ($25.23 million).
Other portfolio statistics:
Post-revaluation contract yield on values 6.11% (6.41%), yield on fully let market rentals 6.41% (6.65%)
Occupancy rate, 98.8% (97.7%)
Rent reviews completed, 100, achieving annualised rental growth of 2.7% – industrial rental growth 2.9%, office 2.5%, large format retail 2.6%
Argosy has one asset listed as held for sale – the Albany Lifestyle Centre – with a book value of $84.6 million ($87.5 million at March 2019).
Augusta Capital Ltd had signed to buy the property for $89 million a year ago for its proposed new Augusta Property Fund, but cancelled the deal on settlement day, 27 March, forfeiting the $4.525 million deposit.
Total, up 22.9% to $729.2 million ($593.5 million)
Syndicated bank loans, up 7.5% to $533.2 million ($496.2 million)
Fixed-rate green bonds, doubled to $200 million ($100 million)
Debt proportion held by banks, 73.1% (83.6%)
Weighted average interest rate, 3.95% (4.75%)
20 May 2020 (briefer version): Argosy earnings up 3.8%
1 May 2020: Augusta forfeits one deposit, second one for property fund still at risk
24 April 2020: First-half gains keep Argosy valuation ahead at year-end
28 March 2020: Augusta pulls Albany purchase, but property fund may be revived
22 November 2019: Argosy lifts profit 15% as it continues to green its portfolio
24 May 2019: Augusta buys Albany Lifestyle Centre from Argosy for new fund
24 May 2019: Revaluations lift Argosy profit
Attribution: Company release, annual reports.