The Abacus Property Group (ASX: ABG) share price is ending the week on a high.
In morning trade, the ASX 200 real estate share is up 8% to $1.17.
This follows the release of Abacus Property Group's FY 2023 results.
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ASX 200 real estate share jumps despite profit crash
- Revenue up 14.1% to $400.7 million
- Funds from operations (FFO) up 8.8% to $175 million
- FFO per security up 3% to 19.6 cents
- Earnings before interest and tax (EBIT) up 12.1% to $235.5 million
- Statutory profit down 95.1% to $25.5 million
- Distribution per security (DPS) up 2.2% to 18.4 cents
What happened in FY 2023?
For the 12 months ended 30 June, Abacus reported a 14.1% increase in revenue to $400.7 million. This was driven largely by a 17.1% increase in rental income to $348.3 million.
Things were also positive for its FFO and EBIT during the 12 months. The ASX 200 real estate share posted an 8.8% increase in FFO to $175 million and a 12.1% lift in EBIT to $235.5 million.
Management advised that this was underpinned by investments in its core Commercial and Self-Storage sectors and aided by longer-term growth strategies. The latter is inclusive of its recent development completions that have contributed to higher quality and more resilient income streams.
Things weren't quite as positive on the very bottom line, though. Abacus reported a net profit after tax of $25.5 million, which was down a whopping 95.1% from $517.2 million a year earlier. However, it is worth noting that this was driven by an unfavourable change in the fair value of investments and derivatives.
In FY 2023, Abacus reported a negative change of $105 million. Whereas in FY 2022, it recorded a positive change of $395.9 million.
Pleasingly, this didn't stop the company from increasing its DPS by 2.2% to 18.4 cents for the year.
Outlook
The ASX 200 real estate share has reconfirmed its FY 2024 guidance.
It continues to expect a distribution of 8.5 cents per Abacus share with a payout ratio assumed to be in the range of 85%-95% of FFO.
It also expects an Abacus Storage King (ASX: ASK) distribution of 6 cents per share, targeting a distribution payout ratio in the range of 90%-100% of FFO. Abacus Storage King was spun off earlier this month into a separate listing.
The company's managing director, Steven Sewell, commented:
FY23 was a transformational year for Abacus Group. We remain confident that both vehicles are positioned to leverage our key enablers and deliver recurring income and value creation over the medium to long term. In a more challenged economic environment, where higher inflation combined with restrictive monetary policy settings is impacting capitalisation rates throughout the Commercial property sector, we remain focused and disciplined on directing capital towards assets that provide potential for enhanced income growth and the creation of medium to long term value.
