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Abacus Property Commits to Office and Self Storage

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A $600 million move to transform ASX-listed Abacus Property Group's investment strategy did not help their bottom line.

The A-REIT’s balance sheet now contains 92 per cent office and self storage assets but statutory profit was down 36 per cent from $127.8 million to $82.1 million, according to half yearly results.

Abacus also $500 million to their office portfolio with the acquisition of 99 Walker Street, North Sydney for $311 million and a 32 per cent interest in 201 Elizabeth Street, Sydney for $202 million in a consortium with Charter Hall.

Abacus also progressed development in Church Street, Richmond—a $230 million in joint venture with Salta Properties.

The group reached $1 billion worth of self storage with upgrades to their current stores and acquisitions worth more than $150 million settled and exchanged.

▲ Developments at Brookvale were completed to deliver more footage in Sydney.
▲ Developments at Brookvale were completed to deliver more footage in Sydney.

In addition, Abacus undertook several transactions to reduce exposure to its non-core legacy investments by selling $150 million in land and mortgages including Riverland, settling Liverpool Plaza for $46 million and putting Oasis Broadbeach on the market.

Abacus managing director Steven Sewell said the group remains positive on its outlook and committed to the office and self-storage sectors.

“Abacus remains committed to executing on its investment strategies as evidenced in HY20, resulting in Abacus increasing its investment in quality office and self-storage assets in target markets and strengthening recurring earnings,” Sewell said.

“Our clear focus remains on acquiring assets that will provide income growth, create value over the longer term and deliver superior risk adjusted returns for our investors.”

At the end of the year funds from operations of $67.3 million was up 3 per cent, FFO per security of 10.59 cents was down 6 per cent, distribution per security went up 2.2 per cent and there was a distribution payout ratio of 89 per cent of FFO compared to the 2019 half yearly results.

Compared to the 2019 financial year gearing went down 810 basis points at 16.2 per cent, proforma gearing of 26.8 per cent up 270 basis points while net tangible assets per stapled security of $3.41 was up 2.4 per cent.

Sewell said they expected Abacus distribution guidance of 2-3 per cent growth for the 2020 financial year.

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Article originally posted at: https://theurbandeveloper.com/articles/abacus-600m-move-sends-profit-down