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Property wolf delivers $191m profit for Abacus

Windfall: Abacus sold its 17.5 per cent share of The World Trade Centre in Melbourne. Photo: Nick LenaghanAbacus Property Group led by industry veteran Frank Wolf has reported a substantial increase in profit of $191.7 million, 2.5 times more than the previous half-year result.

A large proportion of the rise $76.9 million was the result of valuation gains from the group’s investment property portfolio.

Abacus under Dr Wolf’s direction has become known for canny investment choices in the commercial sector and has a growing portfolio of boutique residential projects across .

Its most recent deal was the sale of a 17.5 per cent share of the World Trade Centre complex in Melbourne which was offloaded to a local purchaser with Malaysian interests for $267.5 million.

Abacus’ share of the sale returned $46,812,500.

The group also put its foot on a major development site at 512-544 Spencer Street before Christmas in a joint venture with two smaller developers.

Dr Wolf said the commercial and storage parts of the business contributed more to this half-year result, offsetting a slight reduction in profits from development projects.

“As cycles transition over the coming years, our investment strategies will transition in line, with an increased investment allocated to self storage and investment properties to grow recurring earnings which will support growth in distributions,” Dr Wolf said.

“This transition will be funded from realisations across our funds management and residential development sectors as projects are completed.”

The group’s gearing was a conservative 22.7 per cent.

Within the storage business, revenue per available square metre (RevPAM) increased to $232, up from $227 the year before, and occupancy improved slightly to 88.7 per cent.

Abacus has continued to add to its storage portfolio through acquisitions. It bought four new assets for $22.0 million, adding 4.1 per cent or 12,000 sq m of net lettable area, taking the entire portfolio to more than 302,000 sq m.

Abacus is sitting on about 9000 units or land lots, mostly in Sydney.

“This provides comfort that the group’s exposure to residential apartment and land markets … should deliver strong returns in the future,” Dr Wolf said.

“We believe the market doesn’t fully appreciate our high quality assets and their potential that our investment strategies and consistent returns have highlighted is possible.”

Shaw and Partners analysts said in a note to clients, “things appear to be tracking along nicely for ABP.”

“As cash continues to come in from its residential book, ABP will look to reinvest in commercial or storage opportunities,” they said.

Abacus will provide a half-year distribution per security 8.75c¢.

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