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SCA Property share price on watch after half-year results

The Shopping Cntrs Austrls Prprty Gp Re Ltd (ASX: SCP) share price is on watch today after posting a 129.5% increase in net profit after tax (NPAT).

Why are SCA Property shares on watch?

SCA Property posted a $90.2 million profit for the half-year ended 31 December 2019.

This was driven by a 4.2% increase in funds from operations (FFO) on the prior corresponding period (pcp) to 8.44 cents per unit. Total FFO rocketed 19.1% higher on pcp to $78.5 million after a disappointing end to FY 2019.

Adjusted FFO climbed 15.7% higher on pcp to $70.1 million during the year. However, the group’s distribution to AFFO ratio fell by 9.0% to 100%.

SCA Property shares are worth watching after increasing distribution per unit by 3.4% to 7.50 cents. The Aussie real estate group reported strong increases across all income streams as EBIT surged 87.2% to $109.9 million.

What about the Aussie REIT’s portfolio?

SCA Property’s investment properties increased in value during the half-year. The group recorded a $13.6 million fair value gain compared to a $28.0 million fair value loss last year.

The group’s balance sheet strengthened during the half-year with net assets climbing 1.6% on pcp to $2,137.5 million. Assets under management (AUM) jumped 2.7% to $3,628.8 million in the half-year.

SCA Property shares closed at $2.86 per share in yesterday’s trade while the net tangible assets (NTA) per unit climbed 0.9% higher to $2.29.

The Aussie real estate group increased gearing by 140 basis points (bps)  to 34.2%. The weighted-average cost of debt fell 20 bps to 3.4% as the group’s interest cover ratio (ICR) climbed 30 bps higher to 4.6 times.

SCA Property’s portfolio remains tilted towards food, health and retail services. Coles Group Ltd (ASX: COL)Woolworths Ltd (ASX: WOW) and Wesfarmers Ltd (ASX: WES) are among SCA’s largest tenants.

The distributions supporting SCA Property shares are diversified across sectors. Fresh Food and Liquor made up 32% of the portfolio with Services (21%) and Pharmacy & Health Care (20%) making up nearly three-quarters of SCA’s rent.

The portfolio is also diversified by geography with NSW (24%), Queensland (25%) and Victoria (19%) the largest exposures.

Foolish takeaway

I’d be keeping an eye on SCA Property shares in early trade as one of the first ASX 200 groups to report its earnings this February.

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Motley Fool contributor Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Shopping Centres Australasia Property Group and Wesfarmers Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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