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Australand develops profits

The first half of 2012 has proved profitable for Australand Property Group (ASX: ALZ) with profits of $89.7m after tax which represents 6% growth on the prior corresponding period. Australand will pay a distribution of 10.5c per security for the half year and expects to pay 21.5c for the full year.

Australand is an Australian Real Estate Industry Trust (A-REIT) with a market cap of $1.56b. There are some fifty A-REITs listed on the ASX including Westfield Group (ASX: WDC ) which is the largest, Westfield Retail Trust (ASX: WRT), CFS Retail Property (ASX: CFX) and the Goodman Group (ASX: GMG).

Australand is a group with a $2.3b worth of property, primarily generating recurrent earnings from the rental of industrial and office assets which represented some 72% of earnings before interest and tax (EBIT). In addition it develops residential property which delivered a strong increase in earnings with sales up 15% in the half and which now has 1,316 contracts on hand, up 40% since December.

Managing Director Bob Johnston said, “Trading conditions remain challenging due to both global and domestic uncertainty, leading to a lack of business and consumer confidence. The Group, however, remains well positioned to deliver growth in operating earnings for the full year.” Australand says that it expects to deliver growth in earnings of about 3-4% over 2011.

The group recently established a new loan facility and says it has no further debt refinancing obligations until September 2013. Gearing was at 32.6% at the end of June which is within their target range of 25-35%.

Australand is a ‘stapled security’ consisting of a unit in three trusts and a share in the managing company which means that most or all of the distributions are not franked but some components may be tax deferred, meaning that you don’t pay tax on that portion until you sell the securities.

Foolish takeaway

Australand is trading at around $2.70 which is a discount to the net asset backing of $3.46 and offers a dividend yield of just under 8%. At a P/E of 12.3 it is trading in line with its peers.

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Motley Fool contributor Tony Reardon doesn’t own shares in any companies mentioned. The Motley Fool‘s purpose is to help the world invest, better. Take Stock is The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it’s still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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