Aventus remains confident

LARGE format retail landlord Aventus Retail Property Fund is backing its group strategy to steer it through the challenging retail climate, after posting a healthy increase in funds from operations to $71 million for the full year.

The FFO equates to 17.7 cents per unit and is up from last year’s $41 million and 11.7cpu, and underlines a year that was dominated by the fund’s $436 million acquisition of two Sydney properties, at Castle Hill and Marsden Park, from LaSalle Investment Management in the LFR sector’s largest Australian deal.

However, the acquisition settled on July 3, just after the official close of the financial year.

Chief executive officer Darren Holland said the fund expects its FFO to grow by 2% to 4% per unit in FY2018.

“We have achieved strong gains for the fund this year because we maintained our clear focus on the strategy that we set out when AVN listed nearly two years ago. As part of this strategy, the acquisition of Castle Hill and Marsden Park demonstrate and further consolidate the strong position that AVN occupies in the LFR sector.

“This coming year our focus will be no different. We will continue to proactively manage the AVN portfolio, deliver strong returns from our development pipeline, actively assess selective acquisitions that improve the quality of the portfolio and ensure the Fund is well-positioned for potential zoning and planning reforms,” Holland said.

Its portfolio has a 98.3% occupancy with 84% by area to national retailers,s following 133 leases negotiated over 107,000 sqm, with the tenant base seeing the non-household category grow to 34% of the portfolio by area, and 37% by gross income.

“Non-household goods and services contribute to recurring foot traffic, particularly during the week, while customers seeking household and large format items dominate the centres over the weekends,” he added.

The Sydney acquisition was facilitated by a $215 million entitlement offer, expansion of the fund’s debt facility to $300 million with new tranches expiring in 2021 and 2022, and the activation of a distribution reinvestment plan that has raised $7 million since September 2016.

Property valuations increased by $91 million, and with the acquisition took the fund’s portfolio value to $1.8 billion, with the WACR tightening to 6.85%. Excluding the acquisition, WALE is at 4.2 years and FY18 expiries were reduced from 11% to 7%.

The fund’s profit for the full year was $159 million, with distributions are at 15.9cpu, up from 10.3cpu, and net tangible assets at $2.27, down to $2.22 following settlement of the acquisition.

Australian Property Journal