Float costs push Woolies' real estate arm into red

SCA Property, the real estate offshoot of Woolworths, reported a maiden loss of $4.4 million, due to costs associated with its float. But it has forecast an improved year ahead with acquisitions and long lease contracts.

The group, which owns 75 neighbourhood-style shopping centres across Australia and New Zealand with the major supermarkets as anchor tenants, said distributable earnings after tax were $38.6 million, $400,000 higher than forecast in the Product Disclosure Statement for the October 2012 float.

A distribution of 5.6¢ per unit was declared, in line with forecasts.

SCA Property's chief executive, Anthony Mellowes, said sales growth per square metre, measured as moving annual turnover, for supermarket stores more than two years old rose 8.1 per cent, while for stores 12 to 24 months old growth was 15.9 per cent.

He said the rental income for the period was $59.3 million, lower than the PDS forecast of $63.2 million, due to delays in settlements and lower than forecast rent from specialty tenants. He said the difference was offset by higher rental reimbursement receipts and higher site access fees.

"Since its float the group bought seven neighbourhood shopping centres, introduced Wesfarmers as an anchor tenant (Target and Coles) in two locations and executed a $90 million institutional placement," Mr Mellowes said. "We have made good progress in the short time since listing and we are on track to deliver on the objectives set out in the PDS."

The 2014 earnings per security and distribution per security guidance of 12.2¢ and 10.8¢, respectively were unchanged from the initial disclosure.

UBS analysts said specialty leasing still remained the focus with lower rental income versus the PDS, reflecting a challenging leasing environment.