Australand Property Group has posted a 31 per cent fall in calendar 2009 operating profit and says it expects to see a similar result this year.
The commercial, industrial and residential property manager and developer's operating profit for the year ended December 31 was $120.024 million, down from $174.790 million in 2008.
Its statutory 2009 result was a loss of $298.240 million, reflecting property revaluation losses, asset impairments and finance costs.
During 2009, its investment property assets were revalued downwards by $249.4 million and it booked impairments on developments of $148.4 million.
"It is expected that group operating profit will be similar in 2010 to that achieved in 2009," Australand said in a statement on Tuesday.
"Market evidence indicates that investment property valuations are at, or near, trough levels in the cycle."
Australand also said it expects its investment property earnings to grow steadily, primarily due to embedded rental growth.
"Due to limited new supply to the Australian industrial market there have been limited relocation options for tenants, which has assisted landlords in retaining tenants," it said.
"Commercial property face rents within all capital city central business districts have been under pressure and incentives have been rising over the past twelve to eighteen months.
"However, there is limited future supply of new commercial projects in Sydney and Melbourne as a result of subdued demand and capital constraints."
For 2009, the investment property division, which has a portfolio valued around $2 billion, reported a 13 per cent rise in earnings before interest and tax (EBIT) to $153.9 million - before revaluation losses.
Australand said it expects property values to stabilise in 2010 and sees potential for capital growth through fixed rental increases and some firming in yields, particularly in the industrial sector.
The group’s residential division delivered EBIT of $67.9 million in 2009, before impairments of $116 million, which was down from $117 million in the previous year.
‘‘While economic conditions are showing signs of stabilisation, the group remains cautious about the outlook for the next 12 months,’’ Australand said of the residential market.
‘‘The fundamentals for the sector remain strong with population growth driving demand, but this will be moderated in the short term by the expected pressure on affordability.’’
Australand confirmed it will pay a final distribution per stapled security of two cents, taking the total for 2009 to 5 cents.
It projected a 2010 annual payout of 4.1 cents.
AAP
