Abacus Property Group (ASX: ABP) announces FY22 results

• Group statutory profit up 40% to $517.2 million
• FFO of $160.9 million, up 18%
• Made several acquisitions throughout FY22

Abacus Property Group (ASX: ABP) has announced record self storage growth in its full-year results, with the company recording a 40% increase in profit, and 18% increase in funds from operations.

Source: Abacus Property.

Abacus has invested over $1.2 billion of capital (during FY22 and includes some post balance date transactions) into commercial and self storage. The acquisitions and joint ventures were funded with a combination of debt, proceeds from the divestment of $452 million of non-core assets, and repatriations from legacy residential business, and the $200 million equity raising undertaken in March this year.

Across FY22, Abacus’ investments included the acquisition of 31 self storage stores and development sites for $526 million, 100% interest in 77 Castlereagh Street, Sydney, NSW for $252 million, a one-third interest in Myer Bourke Street, Melbourne, Victoria, for $135.2 million, and the remaining 50% interest in 324 Queen Street in Brisbane, Queensland, for $93.8 million.

ABP also exited its remaining residential loan positions and in July 2021, settled on a development JV with Walker Corporation at 710 Collins Street, Melbourne, where Walker acquired a 50% interest for $56 million.

Commercial and self storage

The company said its portfolio is currently equally allocated between commercial and self storage.

Abacus’ proforma $2.6 billion commercial portfolio comprises a $2 billion office portfolio with 18 assets, and a $0.5 billion retail portfolio comprising two non-discretionary, grocery-anchored shopping centres and two further sites underpinned by mixed use fundamentals.

The company’s $2.6 billion self storage portfolio comprises 124 assets including 18 development sites and a $435 million development pipeline.

“The past several years has witnessed a material transformation of both our commercial and self storage portfolios. Driven by a combination of investment management, active asset management and the development of our customer and brand management capability, Abacus is positioned to deliver on our vision to create exceptional value for our customers and stakeholders as an owner and manager of real estate and operator of storage locations,” said Abacus managing director Stevem Sewell.

Mr Sewell also said: “Overall FY22 operating performance was solid, demonstrating the benefits of our portfolio diversification. Trading conditions continued their positive momentum across our self storage portfolio and while Covid-19 related disruptions impacted our commercial portfolio performance in the first half, it was pleasing to see leasing momentum return in the second half.”

Abacus’ self storage portfolio EBIT contribution increased 57.5% to $109.6 million, portfolio valuation increased by $305.2 million or 15.8%, cap rates compressed 29 basis points to 5.45%, RevPAM increased by 16.1%, and passing yield was 5.5% on the established portfolio valued at $1.3 billion.

For the company’s commercial portfolio, EBIT contribution increased 10% on FY21 to $95.6 million, portfolio valuation increased by $40.3 million or 1.8%, and cap rates compressed 21 basis points to 5.33%.

“Following an active year including strong valuation gains across the self storage portfolio, Abacus has a solid balance sheet with FY22 gearing of 28.7%. Pleasingly our weighted average cost of debt was 2.1% for the FY22 year. Inflationary pressures are having an impact on the cost of our debt book but with the hedging we have in place we anticipate the FY23 cost of debt to approximate 2.75%,” said Abacus’ CFO, Evan Goodridge.