Abacus sells Birkenhead Point

Abacus Property Group has sold the Birkenhead Point shopping centre and marina for $310m. Abacus and its 49% shareholder Kirsch Group each purchased 50% of the centre for $174m in late 2010 and, following a $50m refurbishment, they've made a tidy 40% gain. This is Abacus's signature approach. Buy cheap, upgrade the property, increase the rents, sell at a profit and move on to the next project. At Birkenhead Abacus increased occupancy from 82% to 90% while annual retail sales increased from $125m to $204m.

Despite acknowledging 'overpricing in prime and A grade assets', management is confident that it can reinvest the proceeds at reasonable prices. While management doesn't give guidance, it suggested distributions per share for 2015 would be at least equal to the 16.75 cents paid in 2014, for an unfranked yield of 6.5%. Having increased 8% since Abacus downgraded to Hold from 22 Apr 14 (Hold – $2.40) and 17% since the last upgrade in Abacus: Interim result 2013 from 27 Feb 13 (Long Term Buy – $2.20), we're sticking with HOLD.