The disaster that’s the financially-engineered Australian property sector has been confirmed once again today with a multi-million dollar loss and big capital raising from the Singapore Government-controlled company, Australand Property Group.
It’s another stunning example of the appalling investment touch of Singapore Inc in Australia with Australand reporting a quarter of a billion dollar first half loss and lifting its fund raising in the past 10 months to well over $900 million.
Australand is the rump of the old Hooker Corp empire; it’s 60 per cent owned by Temasek Holdings, one of the two investment arms of the Singapore Government, through Capitaland, a Singaporean developer (and the biggest in Southeast Asia) that’s in turn 40 per cent owned by Temasek.
Temasek has a poor investment record here in Australia: one of its biggest failures was in ABC Learning where it lost well over $400 million in the collapse late last year.
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Australand is the first property group to report for the half year or 12 months to June 30 and its big loss won’t be the last. The red ink was expected as it revealed write-downs a fortnight ago in a market update, but the size of the capital raising was certainly a surprise.
It will be followed in the next three weeks by a string of huge losses from the likes of GPT, Stockland, Lend Lease, Mirvac and Valad, not to mention property trusts associated with the Commonwealth Bank and Macquarie Group and ING.
Even though financial engineers like Allco and Babcock and Brown have failed, and the Centro Property and Retail Trusts have been bailed out by the banks with losses approaching $4 billion or more. Billions of dollars more in losses and writedowns will be confirmed by companies that are still going concerns.
Australand now joins GPT, Stockland and Mirvac in tapping shareholders twice within a year for huge amounts of capital, after revealing huge initial write-downs and losses. Each of these groups has asked shareholders for more than $1 billion (Australand got less the first time round).
This morning it revealed a net loss for the six months to June of $268.8 million and plans to raise up to $475 million from institutions and shareholders.
The raising comes 10 months after the company revealed a $557 million issue last August-September, that was eventually cut back to $461 million when there was a 17 per cent shortfall as some shareholders abandoned the company at the time. That issue was made at 60 cents a security, today’s is at 40 cents, a discount to the market price of 50 cents last Friday.
Australand also downgraded its guidance for its 2009 full-year operating profit. The first half loss in 2009 was down on the prior corresponding period’s profit of $25.55 million. Operating profit for the six months to June after tax was down 11 per cent at $59.98 million.
The result included $235.3 million in losses from property revaluations and $93.45 million in impairments of development and joint-venture inventories.
Australand’s offer comprises an institutional offer of up to $380 million and a retail issue of about $95 million, with CapitaLand, committing to take up its full pro-rata entitlement of around $282 million.
The new shares are being offered at $0.40 each, with holders entitled to buy 7 for every 10 held.