ASX real estate stock Abacus Group (ASX: ABG) is in the green on Friday after the company posted its FY24 results.
Shares in the real estate player are up 1.5% at the time of writing, fetching $1.12 apiece as the market interprets its numbers.
Meanwhile, the S&P/ASX 200 index (ASX: XJO) is slightly in the red today, down 0.35%.
Let's see what the company posted.
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ASX real estate stock gains on strong full-year results
Key highlights from the company's FY24 results include:
- Funds from operations (FFO) of $82.5 million.
- Like for like (LFL) income growth of 4.7% in its office portfolio and 6.3% in its retail portfolio.
- Office occupancy increased to 93.4%, while retail occupancy climbed to 96.1%.
- Stake in Abacus Storage King (ASK) contributed investment earnings of $16.1 million and an occupancy rate of 91%.
- Delivered a full-year distribution of 8.5 cents per security.
What else happened in FY24?
The ASX real estate share improved across many metrics in FY24. It finished the year with a weighted average capitalisation rate (WACR) of 6.5% for its investment property portfolio, up 0.8%.
The group divested its Market Central asset in Queensland, bringing its total commercial assets to 16 and valuing them at $1.9 billion.
The office portfolio, comprising 14 assets, saw LFL income growth of 4.7%, as occupancy increased over the year, combined with a 3.6% bump in rents.
Its retail portfolio also expanded, with a notable increase in its stake in the flagship Myer store in Melbourne to 50%.
Like-for-like rental income growth in the retail portfolio was up more than 6% for the year, with a total occupancy of 96%.
Meanwhile, the company's ASK segment contributed around 20% of the group's annual earnings, producing profits of $17 million.
Despite the many upsides, the company reported a decrease in investment property values of around 13%, which could impact the ASX real estate stock.
What did management say?
Abacus Group managing director Steven Sewell expressed confidence in the Group's strategic direction:
Abacus Group's diversified portfolio of assets exposed to the Office, Self Storage and Retail sectors, is delivering on its vision to create exceptional value for our customers and stakeholders through the identification, ownership and management of a portfolio of real estate investments.
As evidenced during FY24, Abacus continues to constantly review the income and capital returns from all assets within the portfolio, as part of our active asset management strategy, with the aim of directing capital towards assets that provide strong and growing income streams over the medium to long term.
Chief financial officer Evan Goodridge also highlighted the Group's strong capital position:
Abacus Group has diversified its income streams post de-stapling and directed capital towards assets with the best risk adjusted returns.
We delivered a FY24 distribution of 8.5 cents per security, in line with guidance and 25% franked, with the intention to distribute a further $76 million of excess franking credits over the medium term.
What's next?
Looking ahead to FY25, Abacus Group is focused on maintaining its momentum with stable distribution guidance of 8.5 cents per security.
The Group aims to sustain a payout ratio of 85%-95% of FFO, assuming no significant decline in business conditions.
Despite the inflationary pressures throughout the Group's cost base, particularly in property expenses, Abacus Group provides stable FY25 distribution guidance of 8.5 cents per security, targeting a full year payout ratio of 85%-95% of FFO, predicated on no material decline in current business conditions.
ASX real estate stock snapshot
Investors are bidding up this ASX real estate stock today after its FY24 earnings.
Abacus shares are down 4.2% over the last 12 months.
