The Aventus Group (ASX: AVN) share price will be on watch this morning after the company released its results for the half-year ended 31 December 2019.
What did Aventus announce?
The retail property fund manager announced like-for-like Net Operating Income (NOI) growth of 3.1%. All leases in the portfolio include annual rent escalations with over 76% of leases with fixed increases (predominantly 3%-5%) and the balance, consumer price index reviews. In addition, high occupancy of 98.6% was achieved during the half-year.
Aventus further reported a diversified, robust tenancy mix based on income. This consists of 38% of the portfolio from the everyday-needs category, no exposure to department stores nor discount department stores, and less than 2% exposure to fashion and apparel.
59 leases were negotiated across 57,000 sqm of gross leasable area (GLA) achieving positive leasing spreads and low incentives. There was high exposure to national tenants, comprising 87% of the portfolio by GLA.
Financial highlights and asset performance
Funds from operations (FFO) for the half-year period came in at $53 million or 9.6 cents per security. Aventus also reported distributions of 8.5 cents per security, with total shareholder return of 44.1% for the 12 months ended 31 December 2019.
Meanwhile, statutory profit came in at $72 million. Gearing was reduced by 3% to 35.7% in the period, and was within the target range of 30% to 40%. Additionally, weighted average debt maturity was 3.6 years and the weighted average cost of debt reduced to 3.1%.
Net property valuation gains of $20 million were achieved over the half-year, primarily through income growth. This brings the value of assets under management to $2.2 billion.
The weighted average capitalisation rate (WACR) for the portfolio remained steady at 6.7%, bringing the total of net valuation gains over the last 2.5 years to $240 million. This has been driven predominantly by solid NOI growth and well-executed development projects.
Future growth and outlook
During 1H FY20, Aventus spent $15 million across five projects. The development spend for FY20 is forecast to be more than $38 million, with the major component of this spend to occur at Caringbah in Sydney. According to the company, this project has now commenced.
Aventus' strategy in the near-term remains focused on actively diversifying its tenant base, investing in the expansion and development of the portfolio, and undertaking disciplined capital management.
Commenting on guidance, Aventus CEO Darren Holland said: "Confidence in the portfolio's growth potential, together with a lower cost of debt, allows us to guide towards the top of our guidance range of 3 – 4% FY20 FFO growth per security, equivalent to 19.0 – 19.2 cents."
