Brisbane’s Redbank shopping centre sells for $160m

February 3, 2017 Matthew Cranston Property Editor Redbank Plains retail centre, south of Brisbane, services an area estimated at more than 50,600 residents with robust forecast population growth in the next decade. Photo: Supplied Alceon and Brisbane-based developer Capital Transactions have sold their sub-regional shopping centre development at Redbank Plains, south of the city, for $160 million to Singapore’s Rockworth Capital Partners. Rockworth already has more than $700 million in assets under management comprising primarily retail properties in Australia. Rockworth Asset Management executive director Lim Su Kiat was unable to give details on the deal, which was struck on a yield of about 6 per cent through JLL’s Simon Rooney and Sam Hatcher. “I can’t go into specifics,” Mr Lim said, ” but we are always looking for different retail assets.” The 27,000-square-metre centre is anchored by a Woolworths, Coles, Aldi, Target and Daiso and is currently 95 per cent leased following a 20,000-square-metre expansion by Alceon and Capital Transactions. Alceon and Capital Transactions snapped up the Redbank Plains Shopping Village and adjoining land from Queensland coal entrepreneur Paul Darrouzet in 2013 before undertaking the major expansion. The centre serves a trade area estimated at more than 50,600 residents with robust forecast population growth of nearly 65,200 people in the next decade. Yields squeezed Alceon proceeded to appoint JLL to sell the asset in 2015 at a time when demand for sub-regional centres was increasing rapidly. With a shortage of sub-regional malls available to transact, yields have been squeezed in the sector over the past 12 months by about 40 basis points. The average yield on such malls now stands at less than 6.61 per cent nationally. Major recent transactions include Charter Hall Retail REIT’s purchase of Arana Hills Plaza in Brisbane and an adjoining Shell petrol station from super fund investor ISPT for $67.1 million, sold also through JLL. In December British investment giant M&G Real Estate bought Scentre Group’s Casey Central Shopping Centre in the far south of Melbourne for more than $220 million and set a new record for yields on sub-regional shopping centres. M&G Real Estate, one of the world’s largest property investors, purchased the centre on a fully leased yield of about 5.5 per cent. The closest yields for sub-regionals over $100 million include Runaway Bay in Queensland, on 5.91 per cent fully leased, and The Shops at Ellenbrook in Western Australia on 5.75 per cent.

BHP Billiton, Fortescue Metals, Wesfarmers and Woolworths all reporting well as profit season wraps up

By finance reporter Stephen Letts Updated about 5 hours ago Related Story: Santos plunges to $2.7b loss, Sims crushed but Iluka returns to profit Related Story: Medibank profit rises but dividend falls Map: Australia Results from the big end of resources and retail dominate this week with BHP Billiton, Fortescue Metals, Wesfarmers and Woolworths all reporting and pretty well wrapping up the profit season. It has been a case of so far, not so bad, even quite good. At roughly half time, with 47 per cent of companies comprising 61 per cent of market capitalisation having posted results, Citi's Quantitative Research team has the scoreboard reading 30 per cent beating earnings forecasts, 26 per cent below and 44 per cent in line. AMP Capital's Shane Oliver has the score at 54 per cent beating expectations, with 68 per cent of companies reporting higher profits on a year ago — against the long-term average of 62 per cent — and 69 per cent raising dividends. "Company guidance has had a slight positive skew," Mr Oliver said. "The better-than-feared nature of the results to date has been reflected in 66 per cent of stocks seeing their share price outperform the market the day results were released." There is a caveat though; there is still a way to go and good results have a habit of coming out early in the reporting season. Resources: BHP Billiton (Tuesday), Fortescue (Wednesday) and South 32 (Thursday) BHP Billiton's result will not be pretty; expect net profit to be down at least 80 per cent on last year's interim profit of almost $US5 billion. The $US7 billion charge to US onshore oil and gas assets has been well ventilated, after BHP lowered its short and medium-term oil prices. BHP conducts a bi-annual review of its asset values and it begs the question whether any other nasties will pop up in the result. Morgan Stanley resources team — which recently upgraded BHP to a buy — said there was some potential for further impairment, although probably at the more modest end of the scale. That is, of course, unless BHP capitulates on its commodity price assumptions, in which case investors better put on their hard hats. The other big news will be the seeming inevitability of the shrinking Big Australian cutting its progressive dividend policy. Deutsche Bank argued in a note to clients BHP will pull both the capex and dividend levers to maintain its A credit rating. "It [BHP] can cut financial year capex to a reasonable $US5.5 to $6 billion — current guidance is $US7 billion — and cut the progressive dividend by 50 per cent or $US3 billion," Deutsche Bank said. The broker said BHP could cut even deeper into capex — by another $1.5 billion — but argued that it would just damage the business. "Cutting the dividend, in theory, does not change the fundamental value of the company, it is simply an allocation of cash," Deutsche Bank noted in maintaining its valuation of BHP at $20.27 a share. "However, we think it would improve BHP's ability to make value accretive buybacks or pursue M&A [mergers and acquisitions] in oil and copper at this low point in the cycle." Deutsche Bank is looking beyond the profit number — and dividend cut — in the results focusing instead on management's strategy to lift growth and returns. BHP's smaller Pilbara neighbour Fortescue Metals Group has been punished like all the iron-ore miners, but its recent second quarter results showed an improvement, at least in an operational sense. It cut cash costs and the capex budget, improved its mining efficiency and the quality of its product, all of which has boosted margins and moved Fortescue break even costs down to around $30 a tonne. Net profit may even rise to around $400 million, which would be a pretty good effort in the current environment. South 32 — the BHP spin-off of second tier assets — reports as well in what has so far been a short and less-than-prosperous corporate life. Nothing to get excited about here — expect more talk of ripping costs out and there is potential for impairment charges to make for a pretty grim result. Infographic: Share price response relative to market on day of results (Source: AMP Capital) Retail: Wesfarmers (Wednesday), Woolworths (Friday) and Harvey Norman (Friday) Sales growth for all the big supermarket chains is less than thrilling as Coles, Woolworths and Aldi duke it out in a bare-knuckled price fight. Morgan Stanley has been studying the checkouts and found Coles and Woolworths have cut prices by around 4.6 per cent, and Aldi by 1.2 per cent — so in relative terms, not much has changed. "Industry data indicates supermarkets are doing it tougher … supermarkets industry sales growth has slowed to just 2.5 per cent while food inflation in supermarket products has turned negative," Morgan Stanley noted. As the supermarket space race continues — floor space growing at around 4 per cent a year — the immediate outlook is certainly challenging. Wesfarmers is expected to deliver a first half profit a tad under $1.4 billion, or roughly what it produced this time last year. Food and Liquor sales should be growing by a respectable 3.5 per cent, while Bunnings will be good for another 7 per cent or so growth. Wesfarmers' coal operations — as opposed to Coles operation — will be a black spot and drag things down a bit. Woolworths set its first half profit guidance of $900 million to $1 million back in October and has stuck by it ever since. Most brokers are going for the lower end of the range which would represent a 30-per-cent drop on the previous corresponding period. Credit Suisse has forecast zero like-for-like sales growth for Woolworths in food and liquor for the second quarter, which is hardly laying them in the aisles. Credit Suisse also forecasts a considerable contraction in margins, which is unlikely to be appreciated in the investor community. As well, the home improvement business — Masters — will most likely be booked in as a discontinued operation, incurring a rather nasty impairment charge in the numbers. Harvey Norman, on the other hand, seems to be sailing along quite happily, driven by the strong tailwinds from the housing sector. Executive chairman Gerry Harvey does not provide guidance but a half-year profit of around $170 million — up from $138 million last year — on sales growth of 7 per cent is a reasonable punt. Qantas (Tuesday): Qantas is popular tip amongst brokers to produce a pleasant first-half surprise with a profit of around $920 million, at the top end of its guidance range. Whatever the number, the carrier will certainly gain altitude from last year's $200 million profit and the $235 million loss back in 2014. Sydney Airport traffic statistics certainly point to a strong results and international growth and tumbling fuel prices are doing their bit as well. QBE (Tuesday): The consensus view is the globally focused insurer QBE will roll out full-year profit of $US850 million, which would be up on last year's $US821 million. But as always with insurers, there are many complicated and messy bits that make up the bottom line. So far the domestic insurers — Suncorp and IAG — have suffered from poor investment returns as much as natural disasters. Mark-to-market downgrades on asset values could drag down the second half performance while policy renewals may be weaker than expected. Will wage growth and capex crawl off the mat? The week's economic highlights will be two of the domestic economy's lowlights: wages and private capital expenditure. While employment has remained solid, wages and capex have been missing links in non-mining business indicators pointing a broadly robust economy. Capex and the associated expectations survey, due Thursday, have been variously described in previous quarters as appalling, dismal and recessionary. The forecast this time around is for a 1-per-cent contraction, which does not sound great but means things are getting worse at a slower rate than the 9-per-cent fall in December. Wages growth while not dismal, could be described more accurately as flat to moribund at 2.3 per cent year-on-year. It probably will not get worse, but don't expect it to get better in the short-term at least. Overseas, things are quiet. US GDP growth is likely to revised down again, from the current estimate of 0.7 per cent to 0.5 per cent. Unofficial reading of manufacturing activity in the US, Europe and Japan will be released as well and all are expected to show expanding — if not thriving — activity. Australia Day Notes Wednesday 24/2/16 Wage price index Construction work Q4: Wage growth insipid, around 2.3 per cent year-on-year Q4: Down 4 per cent in last quarter, likely to be flat Thursday 25/2/16 Capex Q4: Has been at recessionary levels, couldn't get much worse, could it? Friday 26/2/16 Private sector credit Jan: Has been solid plus 6 per cent year-on-year Corporate Day Notes Monday 22/2/16 Bluescope Steel Brambles Int: Could be a positive surprise driven by cost-cutting Int: A solid first half profit of $US300m forecast Tuesday 23/2/16 BHP Caltex Oil Search Qantas QBE Int: The focus will be on the dividend FY: Profit should rise strongly, dividends up too? FY: PNG growth makes it one of the least bad oil plays. Profit could rise 50 per cent Int: A half-year profit above $900m expected FY: Flatish profit of around $US850m Wednesday 24/2/16 Asciano Flight Centre Fortescue Wesfarmers Worley Parsons Int: Focus will be on the takeover offer from Qube Int: Should be a solid result Int: Cost-cutting and efficiency could make it a not so bad result Int: A $1.4-billion profit will be solid, but flat. Int: Servicing the gas and mining industry means a significant drop in profit is on the cards. Thursday 25/2/16 Crown Entertainment Perpetual South 32 Int: Profit likely to be dragged down by Macau Int: Probably a flat profit of around $60m Int: Not pretty, more cost cutting Friday 26/2/16 Harvey Norman Woolworths Int: Going OK, profit of around $170m tipped Int: Going backwards, profit below $1bn Overseas Day Notes Monday 22/2/16 US, EU, JP: PMIs Feb: Markit's series on manufacturing activity, all expected to be expanding Tuesday 23/2/16 US: Home prices US: Existing home sales Dec: CaseShiller series, up around 6 per cent year-on-year Jan: Robust, up 15 per cent in December Wednesday 24/2/16 US: New home sales Jan: Up 11 per cent in December, may be lower this time Thursday 25/2/16 US: Durable goods orders EU: Inflation Jan: A measure of business investment. Dropped in December Jan: Stubbornly low, 0.4 per cent forecast Friday 26/2/16 US: Economic growth Q4: Forecast to drop from 0.7 per cent yoy. Not brilliant From other news sites: