AUSTRALAND Property Group has announced plans to raise $475 million, at the same time the company booked a net loss of $268.8 million for the first half of 2009.
The company’s first half result was down 1152 per cent on the previous six months profit of $25.55 million. The company reported an 11 per cent drop in its operating profit to $235.3 million. The value of the group’s property portfolio fell $235.3 million, while another $93.45 million was attributed to “impairments of development and joint venture inventories”.
Australand said “there are signs of stabilisation emerging in each of our major markets, which should see conditions improve in 2010”.
Below is the copy of Australand’s statement:
RESULTS FOR HALF YEAR ENDED 30 JUNE 2009 AND ANNOUNCEMENT OF $475 MILLION EQUITY RAISING
Australand today announced its results for the half year ended 30 June 2009 together with a fully underwritten entitlement offer to raise $475 million.
Australand’s majority securityholder, CapitaLand, has committed to take up its full pro-rata entitlement of approximately $282 million.
Half Year Results
Key features of the results and business operations included:
• Operating profit after tax of $60 million (before unrealised property revaluation losses and development inventory impairments);
• Investment property operating profit up 9% on prior corresponding period;
• The sale of $143 million of investment property assets;
• Earnings per stapled security on operating profit after tax of 3.5 cents;
• Distributions per stapled security were 3.0 cents;
• Full repayment of $563 million of Commercial Mortgage Backed Securities (“CMBS”);
• Secured three new debt facilities totaling $350 million; and
• Extension of the maturity date for the $950 million Multi-Option Facility until June 2011.
The Group’s statutory result was a loss for the half year ended 30 June 2009 of $269 million after tax. This result reflects the unrealised losses arising from investment property revaluations of $235 million and development and joint venture inventory impairments of $93 million after tax as announced on 20 July 2009.
Commenting on the Group’s performance in the first half, Australand’s Managing Director, Bob Johnston said “despite the difficult market conditions experienced during the period, all divisions contributed to the operating profit. The Investment Property division performed strongly, achieving an operating profit of $70 million. The Commercial & Industrial division achieved an operating profit before tax of $19 million, while the Residential division achieved an operating profit before tax of $7 million.”
“We have successfully executed on our key strategies and priorities in the first half of the year ensuring that all refinancing requirements were met in what has been a very challenging environment. Securing three new finance facilities along with the full repayment of the $563 million of CMBS notes and the extension of the Multi-Option Facility were significant achievements for the Group” he said.
Commenting on the performance of the divisions Mr Johnston said, “Our Investment Property portfolio has continued to perform well with strong occupancy of 99%.”
“Development activity for both the Residential and Commercial & Industrial divisions however, was curtailed during the first half to maintain balance sheet strength and liquidity. This prudent approach coupled with the challenges being faced across the property sector has led to a decline in earnings and the impairment of inventory for both divisions” he said.
Overview of the Equity Raising
Australand also announced that it would be conducting a 7 for 10 non-renounceable pro-rata entitlement offer (Entitlement Offer) of new stapled securities (each a New Security) in Australand to raise approximately $475 million at an offer price of $0.40 per New Security (Offer Price). Australand’s major securityholder, CapitaLand Limited (“CapitaLand”) has committed to take up its full entitlement of approximately $282 million, demonstrating its commitment to Australand and the Australian market.
The Entitlement Offer will comprise an institutional component to raise approximately $380 million (Institutional Entitlement Offer) and a retail component to raise approximately $95 million (Retail Entitlement Offer).
The Entitlement Offer is an integral part of Australand’s overall capital management strategy, supplementing the Group’s other initiatives to improve balance sheet flexibility via:
• Non-core asset sales and inventory monetisation;
• Debt refinancing and restructuring; and
• Cash flow retention.
The proceeds from the Entitlement Offer will significantly strengthen Australand’s balance sheet, resulting in a reduction in pro-forma gearing as at 30 June 2009 from 39.8% to 27.6%. The Entitlement Offer will provide additional headroom against the covenant limits of Australand’s debt facilities, sufficient liquidity to meet all anticipated funding requirements over the next two years and take advantage of selective opportunities in a disciplined manner.
The Offer Price of $0.40 represents a discount of 20.0% to Australand’s closing price of $0.50 on 24 July 2009, a discount of 12.8% to the theoretical ex-rights price and a discount of 43.5% to pro-forma net tangible assets per Security as at 30 June 2009. New Securities will rank equally with existing
Securities in all respects, including dividend/distribution entitlements.
The Record Date for the Entitlement Offer will be 7.00 pm on Thursday, 30 July 2009. The Entitlements are non-renounceable and will not be tradeable on ASX or otherwise transferable. Securityholders who do not take up their Entitlements in full or in part, will not receive any value in respect of those Entitlements that they do not take up. Securityholders who are not eligible to receive Entitlements will not receive any value in respect of Entitlements they would have received had they been eligible.
Mr Johnston, said “The equity raising will significantly enhance Australand’s competitive position and provide the Group with the flexibility to take advantage of opportunities for each of its divisions and to reposition the business for the longer term.”
“The underlying fundamentals for each of our divisions are sound and as economic conditions improve we want to ensure that we are well positioned with a strong balance sheet to participate in the recovery,” he added.
Australand expects to announce the outcome of the Institutional Entitlement Offer to the market prior to the start of trading on Wednesday, 29 July 2009, with trading expected to recommence at commencement of trading on the ASX on that day.
Eligible Securityholders wishing to participate in the Retail Entitlement Offer will shortly receive information about the Entitlement Offer.
J.P. Morgan Australia Limited and UBS AG, Australia Branch are the joint lead managers and underwriters of the Offer. Macquarie Capital Advisers Limited is financial adviser.
The first half of 2009 saw the continuation of the themes that impacted the property sector during the course of 2008. Asset values continue to fall and credit conditions remain constrained for the sector. It is expected that the remainder of 2009 will continue to be challenging. However, there are signs of stabilisation emerging in each of our major markets which should see conditions improve in 2010.
Following a review of our operations and current trading performance, the 2009 full year operating profit after tax, excluding unrealised gains/losses from revaluations and impairments and the impact of the Entitlement Offer, is expected to be down approximately 35% (previous guidance was 30%) on the 2008 result. This is reflective of corporate earnings corresponding to the low point in the economic cycle. Guidance remains subject to no further deterioration in market conditions.
The Group expects to pay a final distribution for the year ending 31 December 2009 of 2.0 cents per stapled security bringing the distribution for the full year to 5.0 cents per stapled security, underpinned by the earnings from Australand’s quality investment portfolio. Australand is forecasting pro forma H209 Trust EPS of 2.13 cents providing an annualised yield of 10.6% on the Offer Price.
If you have any questions, please call the Australand Securityholder Information Line on 1800 680 188 (toll free within Australia) or +61 2 8280 7929 (from outside Australia) at any time from 8.30am to 5.30pm (AEST) Monday to Friday during the Retail Entitlement Offer Period, or consult your accountant, stockbroker, solicitor or other independent professional adviser.
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO U.S. PERSONS OR PERSONS ACTING FOR THE ACCOUNT OR BENEFIT OF U.S. PERSONS