5 Real Estate Investment Stocks - Lendlease, Stockland, Mirvac, BWP Trust and Charter Hall REIT

Lendlease Group

LLC Details

Strong pipeline and recurring revenue:Lendlease Group (ASX: LLC) reported a 20% rise in their residential development to 5,769, as they delivered 2,533 apartments for fiscal year of 2017. The group’s Australian commercial development with strong office leasing is ongoing and it also completed some projects including the Tower One at Barangaroo South in Sydney. LLC managed to generate a Return on Equity of 12.9% for the year, in line with their 10-14% target range.


Portfolio highlights (Source: Company reports)
 
The group holds a cash balance of $1.2 billion and undrawn debt facilities of $2.2 billion. LLC was selected as preferred partner by Haringey Council on the circa $7 billion Haringey Development Vehicle. The global Construction segment had over $10 billion of work in preferred bidder status at 30 June 2017. LLC’s recurring earnings’ base is also strong wherein they got $3.3 billion of investments and the funds and asset management platforms. The stock has risen about 9% in last six months (as at August 28, 2017). We maintain a “Hold” on the stock at the current price of $ 16.28



LLC Daily Chart (Source: Thomson Reuters)

Stockland Corporation Ltd

SGP Details

Ongoing double-digit growth of retirement living businesses:Stockland Corporation Ltd (ASX: SGP) reported a Funds from Operations (FFO) growth of 8.5% to $802 million for FY17, driven by the strategic repositioning of their assets and restocking the portfolio. The group’s statutory profit has been up 34.4%. Retirement Living businesses continued to perform strong and delivered their fourth consecutive year of double-digit growth. Focus on customer service, and resident satisfaction contributed to this performance.


SGP portfolio (Source: Company reports)

The group has a good redevelopment pipeline to offer the highest quality retirement living options for their residents. Their Net Tangible Assets per security enhanced by 5.8% to $4.04, with income growth and a tightening in capitalization rates on their Commercial Property portfolio from 6.4% to 6.2%. SGP average customer satisfaction score across their business reached 82%. The group settled over 6,604 lots during FY17, with over 50% of net deposits from first home buyers. While there are many drivers of growth including progress of new projects but FY18 funds from operations growth has been indicated to be slightly lower than FY17. We maintain a “Hold” on the stock at the current price of $ 4.36



SGP Daily Chart (Source: Thomson Reuters) 

Mirvac Group

MGR Details

Enhanced ownership in two Sydney retail assets: Mirvac Group (ASX: MGR) enhanced their ownership in East Village in Zetland, Sydney, NSW and made an agreement to acquire the proposed South Village Shopping Centre in Kirrawee, Sydney, NSW from PAYCE Consolidated. The group acquired a 50.1% interest in East Village for $155.3 million, and now has entire ownership on this asset. They are also acquiring the remaining interest in the proposed South Village Shopping Centre. The group intends to leverage the East Village potential which is delivering a sales productivity of $14,950 per square metre after less than three years of trade, and ranking No.1 in the Shopping Centre News’ Little Guns Awards in its first year of entry. This asset’s moving annual turnover is also growing strongly at over 8% per annum. MGR had also entered into an agreement with Suntec REIT for the sale of a 50% interest in its Olderfleet, 477 Collins Street office development in Melbourne. The group in its full year FY17 results indicated for 13% rise in statutory profit and declared distributions at the top end of guidance. The group expects FY18 to be another successful year. The stock is moving towards high levels and we give a “Hold” at the current price of $ 2.26



MGR Daily Chart (Source: Thomson Reuters)

BWP Trust

BWP Details

Relocation of operations to impact Bunnings properties: BWP Trust (ASX: BWP) recently paid a dividend of $ 0.088 leading to the total distribution to 17.51 cents per unit. The group finalized six market rent reviews during FY17 with a weighted average 4.1% rise in annual rent. Like-for-like rentals rose by 2.1% for the 12 months ended to 30 June 2017 while the weighted average cost of debt reached 4.6% for the year.Net revaluation gain on the property investment portfolio reached $111.3 million during the year while the Net tangible assets reached $2.74 per unit as at 30 June 2017.
 

2017 BWP Trust performance (Source: Company reports)

The group’s core portfolio has well located Bunnings Warehouse properties. On the other hand, Bunnings has indicated its intention to vacate up to seven Trust-owned properties, while there is no clarity on timing of re-locating these operations. At year end all the likely impacted properties remained leased to Bunnings, with lease expiries between November 2017 and October 2020. The group expects reduction in rental income for some of the impacted properties. Given some level of uncertainty in future performance,we give an “Expensive” recommendation on the stock at the current price of $ 2.90



BWP Daily Chart (Source: Thomson Reuters)

Charter Hall Retail REIT

CQR Details

Strong bottom line:Charter Hall Retail REIT (ASX: CQR) reported a statutory profit rise of 39.1% year on year (yoy) to $251.3 million, while operating earnings reached $123.3 million for fiscal year of 2017. The group reported a distribution of 28.1 cents per unit, while net tangible assets (NTA) rising 9.0% from June 2016 to $4.13 per unit. The group bought three properties for $282.6 million at a yield of 6.0% while divested eight properties for $157.2 million at an average yield of 6.5%. They finished $63 million redevelopment of Secret Harbor Shopping Centre WA while the portfolio value enhanced 8.4% yoy to $2.8 billion. Their occupancy remained strong at 98.0% while portfolio has long weighted average anchor lease duration of 10.4 years and Portfolio WALE of 6.8 years. However, the stock has fallen about 10% in last three months (as at August 28, 2017) owing to volatility. We give a “Hold” on the stock at the current price of $ 3.92



CQR Daily Chart (Source: Thomson Reuters)

Disclaimer
 
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.