Cinema backs Challenger
Jay Gatsby helped to propel Challenger Diversified Property Group's rise of 9 per cent in net profit to $39.3 million for the 2013 year.
In spite of a deteriorating office market and flat retail for apparel, the group has forecast a 4 per cent rise in "normalised" earnings [before one off items] and distributions, for the 2014 year.
The Baz Luhrmann blockbuster film about the fictional millionaire drew crowds to the group's cinemas, leading to a 6 per cent rise in sales.
A revamp of the Jam Factory mall in Melbourne and low office leasing expires combined to push the 2013 total distribution up 6 per cent to 17.8¢ with a payout ratio of 85.6 per cent. The final distribution was 8.2¢, payable August 30.
The earnings and distribution guidance for the year to 30 June, 2014, was 22.3¢ per unit and 18.5¢ per unit, respectively.
Using the Property Council of Australia's standard, the group's available funds from operations had a payout ratio of 95.2 per cent. More companies are expected to use this standard in the reporting season.
Challenger's profit before property valuations and depreciation was 0.6 per cent lower at $44.5 million, which was in line with expectations and also consistent with the group's update issued in June.
The fund's manager, Trevor Hardie, said he was "pleased" with the results in a time of weaker office markets and flat industrial and retail sales. He said blockbuster movies such as The Great Gatsby were a major contributor to the retail malls.
Challenger's portfolio comprises interests in 27 properties in Australia and France. Over the course of the year, all properties have been independently valued. The fair value of properties was relatively unchanged and Challenger's portfolio mix was 59 per cent office, 19 per cent retail, about the same for industrial and the rest in business parks that have been earmarked for sale.
The French-based assets remain on the market, although the recent decline in the Australian dollar has helped boost the values for prospective European buyers.
"The repositioning of the Jam Factory shopping plaza in Melbourne's Prahran was completed and included refining the tenancy mix, upgrading the car park facilities and expanding the office space. The Jam Factory made a significant contribution to growth in net property income during the year," Mr Hardie said.