Why the Aventus (ASX:AVN) share price edged higher today

Increased asset valuations, positive earnings guidance, and dividend payments were welcome news today.

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Aventus Group (ASX: AVN) shares nudged higher on Wednesday. By market close, the Aventus share price was trading at $3.12 – up 0.97%. By comparison, the S&P/ASX 200 Index (ASX: XJO) ended the day 0.6% lower.

The real estate company came into focus after announcing a positive revaluation of its portfolio, an upbeat earnings guidance, and new dividend payments.

Let’s take a closer look at today’s news from Aventus.

Why the Aventus share price went up

Aventus shares were in the green today after the company advised preliminary, unaudited results of its portfolio assets showed a gain of 12%, or $254 million, compared to 31 December 2020. This decreases the capitalisation rate of its assets from 6.65% to 6.01%. Aventus said over the past 4 years, its assets have increased in value by 30% or $550 million.

Also, Aventus is forecasting funds from operations (FFO) for this financial year to be about 19.4 cents per security. This is an increase of 7% on the prior corresponding period (pcp). Its last earnings guidance showed only a 4% uptick on the pcp.

Aventus said the main reason for the upgrade is “the continued strong performance of the portfolio and a lower cost of debt and… the one-off true up amount referred to at the half-year results released in February 2021.”

In the last piece of news that may have helped boost the Aventus share price today, the company’s board declared it will pay a final dividend for the year of 4.37 cents per security. In its statement, the company said it expects to make the payments by 26 August this year.

While the payment is down 0.53 cents on the March payment, it is 86% greater than the June 2020 payment.

What does Aventus do?

Aventus Group is the owner and manager of over 20 retail centres across Australia. It was formed in 2018 when its separately listed holding company and real estate investment trust (REIT) merged.

Management commentary

Aventus Group CEO Darren Holland said:

Strong investment demand for LFR centres, together with continued positive trading in our centres and a focus on driving sustainable income growth across the portfolio, have all contributed to this significant valuation increase. Pleasingly, this valuation increase will see the Group’s gearing reduce to the bottom of our target gearing range, enhancing our flexibility to achieve Aventus’ strategic objectives in the year ahead.

The hard work of our team in driving the portfolio and diligently managing our capital has also resulted in an upgraded preliminary unaudited FY21 FFO of 19.4 cents per security, which represents growth of 7% from FY20.

Aventus share price snapshot

Over the past 12 months, the Aventus share price has increased by almost 39%. In fact, just since the beginning of the year, shares in the company have appreciated by nearly 14%.

Aventus Group has a market capitalisation of around $1.8 billion.

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The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended AVENTUS RE UNIT. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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