The share price of brick and mortar retailers, and their landlords, have been some of the hardest hit by the lockdowns and social distancing measures put in place to contain the pandemic.
Retail developer and owner Aventus Group (ASX: AVN) is no exception.
The Aventus share price plummeted 54% from its 19 February all-time high through to its all-time low on 27 March. Although it’s gained strongly since that low, up 71% at time of writing, the Aventus share price is still around 22% down from its 19 February peak.
Year to date, shareholders are nursing losses of 17%. By comparison the S&P/ASX 300 Index (ASX: XKO) is down 8% in 2020.
But according to Macquarie Group Ltd (ASX: MQG) analysts, the outlook for Aventus’ shareholders is looking far brighter in the light of this week’s federal budget proposal.
What does Aventus Group do?
Aventus Group owns, manages and develops large format retail centres in Australia. Its portfolio is comprised of 20 retail centres valued at $2.2 billion. That portfolio encompasses 536,000sq m in gross leasable area.
The company’s 70 in-house professionals provide their expertise in investment management, asset management and corporate services. Aventus boasts consistently high occupancy, positive leasing spreads and low incentives across its portfolio.
Aventus has a market capitalisation of $1.3 billion and pays an annual dividend yield of 4.9%, unfranked.
Why could the Aventus share price be set for some big gains?
The new federal budget, outlined by Treasurer Josh Frydenberg on Tuesday, opens wide the fiscal spending taps. Among the new measures, pensioners will receive an additional $2.6 billion in support payments, and Australian workers will receive almost $18 billion in tax cuts.
The budget also contains novel measures to reimburse businesses employing young people by up to $200 per week. This, and other spending measures, should see more consumers open their wallets and spend big.
Combined with the new business investment tax breaks, I believe Aventus can expect most of the tenants at its 20 retail centres to see a marked uptick in their turnover heading into Christmas. As such, this should mean Aventus can expect to see rents coming in reliably and on time.
Although the Aventus share price is down 0.4% in early afternoon trading, I agree with Macquarie that the mid to longer-term outlook for shareholders appears promising.
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Returns as of 6th October 2020
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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool Australia has recommended AVENTUS RE UNIT. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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