Rubicon America Trust’s rapid growth spurt has resulted in a record net profit of $49.3 million for the six months to June 30, 2006 – an increase of 235% when compared to last year.
The trust’s adjusted net operating profit was $10.73 million for the six months to June 30, 2006.
Rubicon’s managing director Gordon Fell said RAT has quickly transformed into one of the major owners of GSA property assets in the United States.
“Now we have reached critical in terms of scale and diversification, our primary focus is on managing the existing portfolio the existing portfolio to maximise returns for investors,” he added.
In the past 12 months, RAT has grown its portfolio significantly through a series of acquisitions. RAT now has $US1.86 billion worth of assets.
In June 2005, the trust acquired an 80.1% indirect interest in a high quality portfolio of 13 office assets and one industrial asset valued at $US487 million.
Later that month, the trust acquired an 80% interest in a property, Maitland 200, located in Orlando, Florida for $US29.6 million.
In April this year, the trust agreed to acquire the remaining 19.9% interest in GSA I Portfolio for $US98.3 million; a 100% indirect interest in a portfolio of 14 Class A office properties located in nine states throughout the US (GSA II Portfolio) for $US560.3 million and an 80% indirect interest in a two office building complex in Fiddler’s Green, Colorado for $US61.6 million.
As a result, the RAT portfolio now consists of 33 properties covering approximately 6.3 million sq ft with 84% of its income coming from US Government tenants.
“We have delivered on our forecast earnings and cash distributions for the half year. This is attributable to the high quality of our tenants and leases and our comprehensive long term hedging arrangements over interest rates and foreign exchange. We expect this to continue for the foreseeable future.
Looking ahead, Fell said the trust does not plan to raise equity over the next 12 months.
“But we are investigating active recycling of the existing capital base and other initiatives designed to increase return on equity for our investors.
The trust has forecast cash distributions of 5.31 cents per unit for the six months ending December 13, 2006 and 10.75 cents per unit for the year ending December 31, 2007. NTA per unit is $1.21.
Meanwhile, the US office markets has continued their recovery throughout the first half of 2006.
And the second quarter of 2006 has continued the trend of overall strong office absorption, rising rent and declining vacancies.
According to CB Richard Ellis and Merrill Lynch, most major office markets are experiencing a strong demand for space and new construction is beginning to increase. However, rising construction costs are likely to keep new construction to a minimum.
The D.C. market is among the top three performers with a vacancy of rate of 10%.
By Adam Parsons
