By a staff reporter, with AAP
Australand Property Group Ltd expects an uptick in leasing activity to boost its full-year earnings despite posting minor declines in both first-half net profit and revenue.
In the six months to June 30, Australand's net profit was $88.415 million, one per cent lower than the $89.672 million recorded in the previous corresponding half.
In the same period, revenue from continuing operations also took a hit, coming in at $391.510 million, a nine per cent fall on the previous first half's $430.483 million.
The group will pay an unfranked interim dividend of 10.5 cents, payable on August 7.
Australand said it expects to pay a final distribution of 11 cents per stapled security for the second half, resulting in full-year distributions of 21.5 cents per stapled security.
Australand closes door on takeover
Australand said it has closed the door on potential takeover bids for the group, after failing to field an offer that satisfied its shareholders as well as major shareholder CapitaLand.
Late last year, GPT Group made a conditional bid for Australand's investment property and C&I businesses. While the bid was rejected by Australand's board, it prompted CapitaLand to review its 59.3 per cent stake in Australand.
"Several indicative proposals were received for parts and all of the business during the process," Australand said.
"However, no proposal was able to be developed that was superior to business as usual.
"Accordingly, the Australand board decided to conclude the process and continue with the execution of the group’s previously stated strategic objectives."
Australand also noted CapitaLand has completed its strategic review and that the property group will remain one of its key investments.
Johnston confident of Q2 performance
Managing director Bob Johnston said a weaker contribution from the residential division caused the drop in profits during the six months to June, but was confident of a turnaround in the second half of calendar 2013 as projects were completed.
"Despite business and consumer confidence continuing to be fragile, residential sales activity strengthened during the first half, with contracts on hand up 36 per cent," he said.
Australand is expecting market conditions "to remain challenging", but still sees three to four per cent growth in operating earnings as residential contracts are signed in the second half of 2013, the investment property porfolio delivers fixed rental income increases and third-party projects are completed in the commercial and industrial division.
Industrial and office division projects were completed in central Melbourne, Rhodes in Sydney's west and a Coles expansion in Brisbane.
"The second half result is expected to benefit from further leasing activity completed on the residual space at 357 Collins Street, Melbourne (currently 74 per cent leased) and Rhodes F (currently 63 per cent leased)," the group said.
Full-year results are also expected to be buoyed by stronger earnings in the group's commercial and industrial division, which Australand expects to post a lift in second-half earnings because of the number of projects currently underway that are expected to be completed before year end.