Australand, whose redevelopment of 357 Collins Street in Melbourne’s CBD forms a major part of its development pipeline, is expecting its 2010 net profit to be the same as last year’s $120 million.
The diversified property group earlier reported a net profit of $72.2 million for the half-year to 30 June. It also cited the Altona Gardens industrial estate as another large Victorian project that would boost its performance in the coming year.
The $72-million net profit included $11.8 million in investment property valuation gains, compared with the $269 million loss it incurred in June 2009, driven by lower valuations due to the global recession.
The company’s operating profit for H1 2010 stood at $60.4 million, while revenue dropped 10 percent to $281.5 million.
The commercial and industrial division has posted earnings before interest and tax (EBIT) of $10.9 million, while residential EBIT hit $23.7 million and investment property division EBIT was $82.6 million.
Australand had strengthened its industrial and commercial pipeline with the acquisition of Altona Gardens ($30 million) and 357 Collins Street ($45 million), said Bob Johnston, managing director of the company.
Work has begun on 357 Collins, which would be renovated and expanded to include an additional 10,000 sq m of office space, said Mr. Johnston.
The property comprises two towers, with the front tower to be brought forward to Collins Street and the lower tower in Flinders Lane to have an extra five levels. A further 2,000 sq m of retail space, food, specialist and coffee shops, would be developed on the ground floor in Flinders Lane.
The development should be completed by Q4 2011, said Mr. Johnston. “It will be the perfect time to come on to the market in Melbourne. Vacancy rates are low and will continue to tighten, peaking at less than 5 per cent. That will be the best time to lease,” he said. Australand intends to have the site 75-percent leased when ready.
The company is also aiming for a 4.5-star environmental rating, said Mr. Johnston. The building had been vacant for around 16 years, making the renovation easier.