Aventus Benefitting from leasing spread

Benefitting from leasing spread: Aventus, a fund established to invest in Australian retail property, has retail showrooms in some large format retail centres in Australia. Since IPO, the combination of active portfolio management, value enhancing developments and strategic acquisitions have contributed to a total unitholder return from the fund of 31.9%. The fund has increased its land bank (total site area) to 1.3 million sqm in FY17. Funds from operations’ (FFO) earnings of 17.7 cents per unit (cpu) has also been in line with the guidance of 17.5 cpu. The focus on value adding development projects is expected to drive benefits going forward and these include, redevelopment of the former Bunnings tenancy that is on budget and programmed for completion during the first quarter of FY18, construction of the first child care facility in the portfolio at Cranbourne Home, and 11 planning approvals sought for further expansion in eight AVN centres. Overall, key aspects to note include the fund’s exposure to large format retail assets and leases to a varied range of tenants with structured rental growth. However, headwinds in the retail sector including the ones from Amazon’s entry in Australia appear to be important to keep in mind. Nonetheless, it is expected that the group might be able to mitigate these headwinds given its focus on occupancy, incentives, and leasing spreads. AVN has forecasted its FY18 FFO guidance of 2%–4% higher than FY17 FFO per unit.

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