SCA sees profits fall amid investment

Shopping Centres Australasia Property Group (SCA) has seen a number of acquisitions, as well as the completion of several developments, push its first half FY19 statutory net profit after tax down 43.5 per cent to $39.3 million.

The profit fall is partially as a result of “expensing transaction costs on acquisitions completed during the period and reduced assets valuation uplift,” with costs involved reaching $36.9 million – largely stamp duty.

“During the period we acquired twelve convenience based centres for $677.9 million, completed two developments, and launched our third retail fund,” SCA chief executive Anthony Mellowes said.

The property group’s investment portfolio grew to be worth $3.15 billion, largely due to the twelve acquisitions, development expenditure worth $12 million, and revaluations adding a further $8.9 million.

Funds from operations grew by 17.5 per cent on the same period last year to $65.9 million, while portfolio occupancy fell from 98.4 per cent as of 30 June 2018 to 98.3 per cent as at 31 December 2018.

“We remain focused on appropriate capital management to support both growth initiatives and our ongoing operations,” SCA chief financial officer Mark Fleming said.

“Our successful debt and equity capital raisings during the period demonstrate the strong support we enjoy in both debt and equity markets, and continue to be well placed to take advantage of investment opportunities in the future as they arise.”

The property group raised $1.07 billion of new capital over the period to fund its acquisitions, developments and to repay existing debt facilities.

Moving forward, SCA hopes to optimise earnings for its existing centres, while committing to a tenancy remixing strategy for its newly acquired properties.

As part of the process, the group will rebase some specialty rents to more sustainable levels, and notes it is aware of the pressures facing certain retailers at present, and will continue to evolve its tenancy mix toward more resilient retail categories across our entire portfolio.

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