Federation Centres says its performance in the first nine months of the financial year highlights an "excellent basis" for its $22 billion merger with fellow property giant Novion, with the company lifting income growth and maintaining its leasing spread.
Federation today said its net operating income was up 3.6 per cent for the nine months to March 31, compared to the same period last year.
The group maintained its leasing spread at 3.2 per cent with 585 transactions completed for the nine-month period, which was in line with the half-year result
Federation saw annual sales growth over the nine months at 1 per cent.
"The Federation Centres portfolio has continued to perform well during the quarter while the work to prepare for the merger with Novion Property Group has also proceeded smoothly," chief executive Steven Sewell said.
Federation Centres and Novion Property Group entered a merger agreement in February that will create a $22 billion real estate investment trust.
"The delivery of net operating income growth combined with a stable leasing spread shows there is an excellent basis for the merger," he said.
The deal would give investors increased returns and better growth opportunities from a larger and more diverse portfolio, Mr Sewell said.
Novion said today, in its March quarter trading update, that it was committed to successfully completing the merger.
The company reported comparable specialty sales growth of 5 per cent in the March quarter, boosting moving annual turnover to 3.4 per cent across the direct shopping centre portfolio, up from 2.8 per cent during the December quarter.
Novion’s total portfolio grew 1.4 per cent over the quarter.
If the Novion-Federation merger is implemented by June 30, Novion said its full-year distribution guidance would lift to 13.9c per share. Novion shareholders would not receive the expected 6.9c distribution for the second half of the financial year -- instead receiving Federation’s distribution, which is expected to be equivalent to 7c per Novion security.
Otherwise, without the merger, Novion maintained its full-year distribution guidance of 13.8c per share.
Novion said it was focussed on “business as usual”-- progressing the development of Chadstone shopping mall, optimising tenant mix and maintaining a fully occupied portfolio.
The Novion-Federation merger will create the second-largest listed manager of Australian retail assets, making it one of the 30 largest groups on the ASX.
Implementation of the merger is expected to occur on June 11.