Welcome to this week's Property News and to the end of Week 22 of COVID impacts.
The Australian population are a patient lot, however it seems (to me at least) that the mood is changing and people are becoming much less amenable to the thought of a pro-longed shut down of borders and industry when COVID cases appear to be getting under control and far less than normal seasonal flu issues.
The annual profit results announcements are showing just how deep the impacts from COVID have been on businesses who rely on people movement (eg Qantas & Vicinity – who each reported c.$2bn losses), whilst other non-discretionary businesses are managing their way through the challenges, some with better results than last year.
For many people, money from JobKeeper and the early access to Super, has assisted household budgets and found its way into "improvement" options (Bunnings, Officeworks, JB HiFi, Kogan etc) and also into house & land developers (Mirvac's & other privates).
The July retail trade numbers released yesterday support these results with retail turnover up 3.3%. Turnover in household goods was 30% above the levels of July 2019, with sales of furniture, whitegoods and electrical items remaining high.
From a property point of view, COVID19 has encouraged people to contain movements to their local areas and to avoid large gatherings. Large shopping malls and office spaces are therefore being avoided in favour of restrained non-discretionary spending at local neighbourhood centres as well as on improvements for the home, whilst discretionary spending is more likely to be done on-line.
The key highlights from the AREITs results release this week included;
- Vicinity results reveal a $2.1bn fall in statutory profits as the Pandemic drives earnings down -25% and valuations down -11.4%.
- Mirvac's earnings per share down -10% and distributions per share down -22%
- Dexus saw earnings growth drop -6.6% but managed to keep FFO per security up 1.0% on the prior year
- LendLease earnings were down -80%
- Charter Hall's earnings per security was up 46%
- Growthpoint enjoys 2% growth in FFO and valuation gains of 5% but the recently completed Botanicca likely to remain vacant for some time.
- Abacus also suffered with FFO per security is now down -13% due to COVID
- Ingenia lifts underlying EPS by 5% on FY19
- Elanor Retail is at risk of needing additional equity as vals falls and gearing increases forcing the group to cease distributions.
- APN Property Group reported Operating Earnings up 6% per security.
- Waypoint REIT earnings up 3.2%
Charter Hall and Goodman (reported last week) are clearly the standout AREITs (so far) with continued growth in funds under management, recurring earnings and strong investment returns. More to report next week.
Until next week
Warwick
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