Investa has joined the list of Australian LPTs launching themselves into Europe.
At yesterday’s half-year profit result, Investa said it has signed a memorandum of understanding with Deutsche Gesellschaft Fur Immobilienfonds mbh, a German based European fund manager managing $A16 billion of property assets.
DEGI is 94% owned by Dresdner Bank AG, a wholly owned entity of the Allianz Group.
Yesterday, Investa reported a net profit after tax of $347 million for the six months to December 31, 2006 – up 124% on $155 million in 2005.
Based on net profit after tax of $347m, earnings per security for the six months were 22.87 cents per security, up 122% on the prior corresponding period. Underlying earnings per security was 7.72 cents per security, down 0.22 cents per security on the half year ended December 31, 2005.
The distribution for the period was 7.60 cents per security compared to 8.45 cents per security in the prior period.
Investa’s managing director John Arthur said the group’s Internal Funds’ Investment Portfolio performed strongly.
The Investment Portfolio contributed $330 million to EBITDA, an increase of 123% on the prior comparable period. When revaluations and asset sales totaling $196 million are excluded, Internal Funds contributed 86% to Group EBITDA.
Leasing activity during the six months resulted in 105,000 sqm of leases being executed and a further 64,000 square metres of space being subject to Heads of Agreement.
Arthur said the challenge now is to maintain the portfolio’s momentum as vacancy rates continue to fall in key markets and upward pressure on rents increases.
“Our External Funds and Commercial Developments businesses also grew strongly, working closely together to maximise Group value from their complementary asset accumulation and product manufacturing capabilities. The project at 6 & 7 Eden Park Drive, North Ryde is a good example of those two businesses supporting each other’s growth, generating both development profit and ongoing fee income, as quality product is provided to our External Funds’ customers.
“At Clarendon Residential things remain difficult as that business faces the toughest market conditions seen in New South Wales for many decades. However we have a new, proven, leadership team in place there, and I am confident that their hard work will position Clarendon Residential well for when the market does turn, most likely not before 2008,” he added.
The Clarendon Residential business contributed $9.2 million to Group EBITDA after restructuring costs of $2.5 million. The underlying earnings of $11.7 million are significantly down on the prior period primarily due to a weak residential market in NSW, where housing starts are at their lowest levels for many decades.
Commercial Developments’ EBITDA for the period was $15.8 million, up from $0.5 million in the prior comparable period. Profits from the sale of investment properties generated $17.5 million, principally from the sale of the Macarthur Central retail asset in Brisbane.
The EBITDA of Investa’s External Funds business increased 56% to $3.9 million from $2.5 million in the prior comparable period. The business increased its funds under management to $1.7 billion, an increase of 31% on December 2005.
Arthur said the External Funds business continues to evolve and rationalise its product mix.
“Investa has been successful in growing its wholesale funds management business because we are constantly trying to understand and meet the changing requirements of our customers. There is no doubt that global investment by Australian investors is an emerging issue. There is also no doubt that, when they look offshore, Australian investors want access to the best local knowledge and capability in the geographies where they plan to invest,” Investa’s group executive of External Funds Bill Grounds said.
“We are very excited to have identified and subsequently teamed up with DEGI, a firm with unrivalled credentials in the European property market. DEGI represented the best fit for the Investa model with both companies having active asset and portfolio management philosophies,” he added.
Grounds said he expected the platform and associated product development work to be completed this calendar year.
DEGI’s managing director Malcolm Morgan said with DEGI’s global expansion it is of the essence to liaise with professional partners with a similar “hands on” investment and asset management approach.
Investa’s gearing as at December 31, 2006 was 30.6%.
Australian Property Journal
