Australand Property Group (ALZ) posted a NPAT of $120.2 million for the year to 31 December 2009, down 31% on the previous year and in line with guidance. The group said it expects operating profit to be similar in 2010 to that achieved in 2009 as market evidence indicates that investment property valuations are at, or near, trough levels in the cycle.
Australand’s statutory result for the year ended 31 December 2009 was an accounting loss of $298.2 million, which the company said reflected the impact of revaluation losses on investment properties of $249.4 million, the impairment of development and joint venture assets of $148.4 million and non-recurring finance costs of $20.7 million.
Managing director, Bob Johnston said property valuations now appear to be stabilising with revaluation losses of $14.0 million in the second half across the $2.0 billion portfolio.
Looking at the Investment Property division, which posted a 13% increase to EBIT to $153.9 million and comparable rental income growth of 3.3%, Mr Johnston said it underpinned the group’s distributions with secure predictable earnings.
”Our portfolio continues to perform very well, with strong metrics, including occupancy of more than 99%, a weighted average lease expiry of 5.8 years and fixed rental increases of 3.4% over 89% of investment property income for the next twelve months,” Mr Johnston said.
The Commercial and Industrial Division, however, reported a 59% drop in EBIT to $39.5 million, excluding impairments, while Residential EBIT was down 42% to $67.9 million.
“As foreshadowed early in 2009, development activity was curtailed during the year, particularly in the Commercial & Industrial division, given the difficult capital market and economic conditions,” Mr Johnston said.
”Margins for the Residential division remained under pressure during the year as the division continued to trade through impaired and non-core inventory.”
Australand said interest bearing debt as at 31 December 2009, net of cash, was $852 million, down 41% from $1,437 million at 31 December 2008.
Looking ahead, the group expects Investment Property earnings to grow steadily, primarily from embedded rental growth, adding that it is well-positioned to take advantage of the improving economic conditions due to its strong balance sheet.
As at 1115 AEDt, Australand shares were up 1.5c to 46c.
