Aventus Retail Property Fund

First half FY 18 Performance and FY 18 outlook: Aventus Retail Property Fund’s (ASX: AVN) stock rose 2.88% on February 12, 2018 after the company announced its first half FY 18 results. AVN in the first half of FY 18 has reported 3.4% rise in Funds from Operations (FFO) to 9.1 cents per unit with first-half earnings from its portfolio of 20 large format retail centres up 29% to $45 million. AVN has posted the profit growth of 16.6% to $75 million in the 1H FY 18 and this includes contribution from Castle Hill and Marsden Park which got settled in July 2017. The company has completed approximately $500m of capital transactions, which comprised of $436m of acquisitions and $60m of divestments to increase the quality of the portfolio. Moreover, AVN has reduced gearing of the fund to 36.9% as at 31^st December, which is within the target range of 30% - 40%. The new $110 million loan note facility expiring in 2025 was introduced to four new lenders to the Fund, which will diversify the debt sources and lengthen the weighted average debt expiry. Additionally, in the first half of FY 18, AVN’s distributions increased by 3.8% to 8.1 cents per unit. However, AVN has reduced the full-year guidance, and expects FY18 FFO per unit to be 2% - 3% higher than FY17 FFO per unit, which is below the earlier provided guidance of 2-4%.
 
It is worth noting that the Property valuations of $58m were achieved across the portfolio for the half year bringing the value of the portfolio to $1.85 billion post settlement of Tweed. The $436 million acquisitions of Castle Hill and Marsden Park were settled and integrated into the portfolio.
 
Meanwhile, AVN stock has fallen 11.11% in three months as on February 09, 2018. The stock has potential given the improved quality of portfolio and is on a continuous look-out for opportunities in the fragmented ownership sector. We give a “Speculative Buy” recommendation on the stock at the current price of $2.14
 

1H 18 Financial Performance (Source: Company Reports)

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