Net Profit

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Data recently released by the ABS shows that household net worth has increased substantially over recent years however, household debt is also climbing to new record highs.
The ABS’ recent release on finance and wealth for the December 2016 quarter showed that the net worth of Australian households was $9.405 trillion. 
This comprised $11.710 trillion in assets minus $2.306 trillion in liabilities (including share capital). 
Over the 12 months to December 2016, net worth has increased by 8.3% with asset values increasing by 7.9% and liabilities increasing by 6.4%. 
The data breaks out the value of residential land and dwellings which as at the end of 2016 was valued at $6.114 trillion having increased by 8.3% over the year. 
Residential land and dwellings accounts for 52.2% of total household assets.
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Using the data that the ABS publishes on wealth, the Reserve Bank (RBA) publishes a number of finance ratios for households comparing debt and assets to disposable incomes.
At the end of 2016, the ratio of household debt to disposable income was recorded at 188.7%, the highest on record and rising by 1.6 percentage points over the quarter and 3.1 percentage points over the year. 
The ratio of housing debt to disposable income was recorded at 133.8% which was also a record high. 
Based on this data, 70.9% of total household debt was housing debt. 
Over the quarter, housing debt increased by 1.5 percentage points and was 4.5 percentage points higher over the year.
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While the ratios of household and housing debt to disposable incomes is at record-high levels, so too are the ratios of household and housing assets to disposable incomes. 
The ratio of housing assets to disposable incomes sits at 910.6% having increased by 23.2 basis points over the quarter and 42.2 basis points over the year. 
Meanwhile, the ratio of housing assets to disposable income sits at 500.4% having increased by 18.2 basis points over the quarter and 23.8 basis points over the year. 
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Comparing household debt to assets results in a ratio of 20.7% while the figure for housing debt to housing assets is 26.7%. 
This indicates that although household and housing debt is at an historic high level, the value of the assets that this debt is held against is also higher than it has ever been. 
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The data within this report should be viewed with some caution because it is not a granular analysis; so while the national figures may show a strong financial position, at smaller geographies, particularly where dwelling values are falling, the position is likely to be dramatically different. 
With regard to debt, the figure is measured as a national measure and includes those households that are renting and those that own a home but carry no housing debt.
Some households have held their homes for many years and paid down a substantial amount of the debt on the home. 
For those that have either recently purchased, bought at the peak of a market which has since declined or those using interest-only mortgages they are unlikely to be in such a strong position as the national figures indicate. 
Those that don’t own a property asset are also likely to have substantially less household assets than those that do own a home.
Overall household debt is higher than it has ever been and although asset values are also at a record high, there remains concerns about how healthy it is to have such high levels of private debt. 
Furthermore, high debt, particularly for recent purchasers of residential properties, creates risks in the event of a housing market downturn which could see home owners enter into a period of negative equity. 
Especially with the heightened level of investor purchasing recently, investors have demonstrated a greater willingness to sell at a loss because that loss can be offset against future gains. 
Those that own owner occupied property do not enjoy a similar ability to offset these losses and are potentially much more financially vulnerable in the event of a housing market downturn. 
The high level of household debt is also expected to limit the ability for the RBA to lift interest rates suggesting that a neutral cash rate setting will be lower than it has been in the past.
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ckusher-ujnxiKuFQs

Household net worth sits at $9.406 trillion: Cameron Kusher 

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Dexus Property Group reported a more than 200 percent rise in its statutory net profit after tax for the six-months ending December 2015, helped mainly by gains from revaluation of investment properties. 
The company, which invests in office and industrial properties, reported a 25.3% increase in its Funds From Operations to $323.9 million, or 33.4 cents per security, reflecting a 17.1% increase. It guided for 5.5-6.0% growth in FFO per security for the financial year ending June 30, 2016.
Chief executive Darren Steinberg said he expected interest rates to remain low for a longer period which would help businesses and consequently, leasing.
“Office market fundamentals, particularly in Sydney, are expected to continue to improve as Australian corporates invest for growth. Investment demand should also retain its strength as investors seek the defensive nature of property,” he said.
The company’s statutory net profit after tax was $797.5 million, a rise of 209.3% on the previous corresponding period, primarily due to $533.7 million of net revaluation gains on investment properties. 
“Revaluation gains across our property portfolio drove the majority of the increase in statutory net profit and NTA per security, as recent comparable market transactions drove cap rate compression at properties with strong tenant covenants,” Steinberg said.
Net tangible assets (NTA) per security was $7.25, up 57 cents from 30 June 2015.
Dexus has also entered into a binding agreement with the management of Investa Office Fund (IOF) under which it will seek to buy all of the units in IOF, subject to the approval of IOF Unitholders. Dexus said it views the acquisition as accretive to underlying FFO per security.
The deal already has won approval from competition watchdog ACCC.
The group achieved 245 leasing deals across 242,596 square metres and said it had completed developments at 5 Martin Place, Sydney and Kings Square, Perth, with 480 Queen Street, Brisbane nearing completion. 
Dexus said it was in talks with the NSW government for the sale of 39 Martin Place, Sydneyfor the new metro rail project.
It said as part of its strategy to divest from non-core properties, Dexus sold off 36 George Street, Burwoodfor $95 million for a 32% IRR on investment.
It also plans to develop a 41,163 square metre office tower at 90 and 100 Mount Street, North Sydney. 
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prateek24-ezbwHMbNAk

Dexus reports more than 200% rise in net profit on gains from investment properties

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Vicinity Centres today reported a statutory net profit of $424.6 million for the six months ended 31 December 20151.
Underlying earnings were up 10.1% to $377.6 million with underlying earnings per security (EPS) up 9.3% to 9.5 cents, compared to the six months to 31 December 2014 on an aggregate basis.
"This reflects solid portfolio performance and the delivery of significant merger benefits," Angus McNaughton, CEO and managing director, said.
“We are pleased with the performance of the Group in the first six months post merger.
“Key operating metrics have improved across the board.
"Portfolio occupancy strengthened in the half by 30 basis points (bps) to 99.2%.
"We have seen comparable specialty store moving annual turnover (MAT) growth improve to 3.4% and specialty occupancy costs remain largely unchanged.
"Comparable net property income (NPI) growth6 of 3.7% is up from 2.5% at June 2015, supported by fixed rental increases, strong growth in ancillary income and flat expenses.
“The improvement in our sales performance is pleasing considering that two of our prime assets, Chadstone and Emporium Melbourne, are not in the comparable reporting basket.
"At Chadstone, which is in the midst of a significant development, same-store MAT growth for specialties was 5 per cent.
"At Emporium Melbourne, monthly same-store specialty sales growth has been averaging 18% compared to the previous year.
“We have enhanced the quality of our portfolio in the period with the acquisition of two high quality centres and the sale of five non-core assets.
“Following the completion of a comprehensive review of our portfolio, we reiterated our strategic focus to create value and drive sustainable growth from a quality portfolio of Australian assets across the retail spectrum.
"We also announced the Group’s through the cycle financial targets of a total return of greater than 9 per cent per annum and underlying earnings growth of greater than 3 per cent per annum.
“We have set clear investment criteria for benchmarking our existing assets and potential acquisitions.
"As a result, $750 million to $1 billion of asset disposal opportunities have been identified, with asset sale proceeds to be reinvested into value accretive development and acquisition opportunities over time."
Three current projects at Colonnades, Halls Head Central and Warriewood Square remain on track to open by June 2016. There are also a further two minor projects (DFO South Wharf and Rockingham) totalling $21 million, which are forecast to have a blended year one yield exceeding 12% and an IRR exceeding 19%, that will complete later in this calendar year.
Development plans are well advanced at Mandurah Forum, with the project expected to commence in mid-2016, while planning for major redevelopments at Roselands and Galleria remains on program. 
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jchancellor-FAypfDUnLy

Vicinity reports strong Emporium Melbourne sales growth

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Gold Coast residential developer Villa World have reported a 32 percent rise in its 2016 net profit having delivered $33.7 million in net profit after tax.
They are keen to buy more development sites after seeing a substantial rises in profits from $25.6 million last year.
The company reported strong sales figures for the year ending June 30, driven by strong sales, settlements, and a focus on domestic buyers.
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“In 2016 we hit our target with a total of 1185 sales, almost double our result from three years ago,” managing director and chief executive Craig Treasure said.
“The domestic market has been our focus with less than 5 per cent of 2016 sales to international purchasers.”
The company also achieved a higher number of settlements this year, seeing a rise from 816 last year to 1073.
The amount of settlements helped lift Villa World's revenue by 20 percent to $387 million.
They purchased 2139 lots, taking their portfolio to 5937 lots as at June 30.
“The near-term focus will remain on the continued replenishment of the portfolio in southeast Queensland, growing the Victorian land bank with a focus on the southeastern and northern growth corridors of Melbourne, and growing a presence in NSW,” Craig said.
The company is targeting a net profit growth of at least 5 per cent and a dividend of at least 18c a share next year.
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j.ballantyne1990-6AQqhLzZaK

Gold Coast developer Villa World secure 32 percent rise in profits

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The nation's largest bank, Commonwealth Bank of Australia's has reported a 6 per cent fall in its net profit, hit by the costs associated with fixing historic misconduct issues and tighter margins due to competition and rising costs.
The CBA produced a weaker than expected result. 
First-half profit came in at $4.6 billion, down from $4.9 billion in the corresponding period last year.
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Cash profit — the bank's preferred measure that strips out one-off gains and losses — rose 1.7 per cent to $4.68 billion, with higher sales volumes of loans offset by lower margins.
It lower than the $4.87 billion it reported for the first half last year.
CBA reported that cash profit fell 2.1 per cent.
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The interim dividend per share was flat at $2.00. 
The bank recorded an operating income of $12.4 million which was down 1.9 per cent for the same period a year earlier. 
<div class="advert" data-ad-type="MEDIUM" data-loc="MOBILE" data-max-width="767" data-reactid="50">CBA attributes this to volume growth being offset by its net interest margin decline, lower fees, weaker trading income and the impact of weather events. </div>
Volume growth in the core business resulted in lending and deposits increasing by 2 per cent, while home loan volumes increased 4 per cent.
The growth was more for owner occupiers than investors.
 
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