Fkp Scraps 10% Growth Forecast
Sydney Morning Herald
Wednesday October 1, 2008
FKP Property Group has scrapped its 10 per cent earnings growth forecast for the current financial year, saying the turmoil in financial and credit markets has made the future hard to predict.
Having only released its net profit of $150 million for the 2007-08 year on August 28, the group warned yesterday that earnings for the coming 12 months were unlikely to change.Blaming an expected lack of liquidity in the next 12 months, FKP directors said in a statement that conditions had made "the trading of quality commercial property even more difficult than it has been"."With the unprecedented turmoil in global capital and credit markets in the past two weeks, it is reasonable to assume there will be some effect on the property markets, and this makes it hard to read the year ahead with certainty," the statement said. "FKP believes it prudent to advise that, at this time, an operating profit after tax in line with last year's result [$150 million] is a more realistic outlook, still subject to there being no undue delays in regulatory approvals [for new projects]," it said. The warning comes as the retirement property and aged-care sector undergoes significant consolidation. Late in June Lend Lease revealed it had made an informal $1.3 billion offer for FKP at $5 a security, which was rejected by its directors. FKP closed lower by 94c, or 19.62 per cent, to $3.85 yesterday, in line with the rest of the market. At the same time Lend Lease amassed a strategic stake of 7.6 per cent in its rival Babcock & Brown Communities. A three-way tie up of BBC, FKP and Lend Lease would create a formidable player in the retirement home sector.BBC owns and manages 56 retirement villages and 29 aged-care centres in Australia and New Zealand, with about 10,000 retirement units and 2200 beds.FKP is its biggest competitor, with a 3 per cent market share. Another player, Prime Retirement and Aged Care Trust, which has also made a formal yet unsolicited scrip offer for BBC, owns more than 4600 retirement resort units and 770 aged care beds, and has a pipeline of 2900 units over the next five years. BBC is expected to release details of its review this week, and it may buy out Babcock & Brown's rights for $17.5 million - or be taken over by either Lend Lease, Stockland or Prime.Meanwhile, Aevum - in which the infrastructure operator Babcock & Brown has a strategic 14.4 per cent holding and over which its satellite retirement business, BBC, has first right of refusal - yesterday named Steve Mann as its new managing director. He was previously in charge of Stockland's commercial and industrial businesses.
© 2008 Sydney Morning Herald
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