Real estate investment trust SCA Property Group or the company known by Google Finance as Shopping Cntrs Austrls Prprty Gp Re Ltd (ASX: SCP) today reported a half-year adjusted funds from operations of $56.1 million, up 4.9% on the same period last year.
Statutory or "non-cash profit" came in at $69.6 million, down 66% on the prior year due to "a smaller increase on investment property valuations compared to the prior period".
Income investors will be pleased to know that the group will pay an interim dividend of 6.8 cents per unit from funds from operations of 7.52 cents per unit. This represents a payout ratio around 90%, with the group lifting its full year forecasts for a total fiscal year payment of 13.9 cents per unit on total earnings of 15.3 cents per unit.
Based on today's selling price of $2.21, SCA Property Group offers an unfranked yield of 6.3%, while selling for around 14.4x funds from operations.
The group is the landlord to many household names including supermarkets operated by Woolworths Limited (ASX: WOW) and the giant warehouses of Bunnings Home Improvement that are owned by industrial conglomerate Wesfarmers Ltd (ASX: WES).
Over the half-year period SCA Property completed an additional four property related acquisitions worth $38.3 million and had a healthy portfolio occupancy rate of 98.4%.
Gearing (finance debt – cash divided by net tangible assets) stood at 32.5%, which is not especially high for a real estate investment trust with defensive cash flows, but debt levels remain a critical risk for any investor.
Net tangible assets per unit clocked in at $2.23, which is marginally above the selling price of $2.21 per share. As such SCA Property Group looks to trade at fair value for income investors.
It also remains a defensive business for retirees seeking to beat cash rates with the 6.3% yield reasonably attractive given the likelihood that cash rates in Australia are unlikely to move more than 50 basis points higher for at least the next 18 months.
