Babcock & Brown Japan Property Trust has gone on a shopping spree buying up five retail properties for ¥15.4 billion $177 million – and why not, BJT has just posted a net operating profit of $39.3 million for the year to June 30, 2006.
The annual profit result is 14% above the trust’s forecast net operating profit of $34.4 million in the November 2005 Product Disclosure Statement November 2005.
Babcock & Brown Japan Property Management’s managing director Eric Lucas said the increase profit result were primarily due to higher than anticipated property occupancy, as well as the acquisition of two office properties in February and March 2006.
“We are extremely pleased with the result for the year, BJT’s first full financial year of operation since the IPO in April 2005. This result reflects a strong leasing performance, upward revaluation of portfolio assets and additional income earned from a number of accretive property acquisitions made during the year.
“To have delivered a DPU for the full year which is 12% higher than the original IPO forecast is very satisfying and underscores our commitment to sustained distribution per unit growth,” he added.
For the year ending June 30, 2006, after adjusting net operating profit for a number of non-property related items and the revaluation of 12 properties, the AIFRS net profit after tax was $59.5 million.
The trust’s revenue from ordinary activities was $131.75 million.
The trust has made a final distribution per unit of 5.38 cents, taking the full year DPU to 9.76 cents, 4% higher than the PDS forecast and 12% higher than the forecast at the time of the IPO in April 2005.
Meanwhile, BJT is undertaking an institutional placement of 64.3 million units totalling approximately $110 million to partially fund the acquisition of the five retail assets.
The balance of the acquisition will be funded by debt. The trust’s gearing ratio will remain virtually unchanged upon completion of the transaction, at 51% compared to 50.9% at June 30, 2006.
“The transaction substantially increases BJT’s balance sheet capacity and provides significant scope for further accretive, debt-funded acquisitions.
“Following this transaction, assets will have more than doubled in size in the 16 months since the IPO, to 36 properties with a value of ¥110 billion ($1.3 billion). This compares to the portfolio of 12 assets acquired for ¥47 billion (approximately $600 million) at the IPO,” he added.
Lucas said BJT will continue to source additional property investments despite the increasingly competitive acquisition environment in the Japanese property market with the recovery in the Japanese economy.
The five retail assets are expected to increase distributable cash flow per unit by 0.46 cents on an annualised basis. This is 4.3% of the annualised distribution for the six month period ended June 30, 2006.
By Adam Parsons