Why the Aventus (ASX:AVN) share price is rising today

The Aventus Group (ASX: AVN) share price has rallied after a quick dip on open today following a business update for the first quarter FY21 period. At the time of writing, the Aventus share price is up 1.96% to $2.60. In comparison, the S&P/ASX 200 Index (ASX: XJO) is slipping 0.1% to 6,522 points.

Aventus is a retail property company which owns and operates 20 large format retail parks across Australia. 

What’s driving the Aventus share price?

For the period ending October 31, Aventus advised that its portfolio remained 100% open for centre trading. Excluding Victoria, foot traffic increased by 9% over the prior corresponding period. Interestingly, half of the centres outside the Victorian state experienced double-digit foot traffic growth.

As coronavirus restrictions ease, Victoria has seen centre traffic lift 13% over the first 2 weeks in November. However, the company noted that the 6-day lockdown in South Australia may impact one of its centres.

In addition, occupancy rates have risen to 98.2% with minimal holdovers of 2.6%. More than 42 leasing deals were negotiated in the period.

Rent collection within the portfolio strengthened with roughly 90% of gross bill rent received. This translates to a 3% gain on the 4 months prior to first quarter FY21.

The development of its super centre in Caringbah, Sydney is complete and now 100% leased. An independent valuation report put the centre’s worth at $139 million, reflecting a 13% increase in book value.

FY21 guidance

Aventus indicated that the improved performance of its portfolio had restored confidence. To reward shareholders, the group said it would re-establish its dividend pay-out ratio approximately 90% of net income for the September quarter.

Provided that there are no unforeseen impacts due to COVID-19, Aventus forecasts guidance for FY21 to be at least 18.5 cents per security. This represents a minimum 2% growth compared to FY20.

What did the CEO say?

Commenting on the group’s performance, Aventus CEO Darren Holland said:

The Aventus portfolio continues to be resilient with cash collection improving to approximately 90% and traffic growing +9% in the last 4 months. Australians continue to spend more time and money at home – working, learning and entertaining – and this has driven strong sales growth to our large format retailers.

In September, we resumed distributions at a 90% pay-out ratio and today I am happy to announce that continued improvement in the operating performance of the portfolio has given Aventus confidence to provide an FY21 FFO guidance of at least 18.5 cents per security, implying at least 2% growth versus FY20.

Aventus share price summary

The Aventus share price has been climbing higher since dropping to its all-time low of $1.36 in March. The company is not far off its 52-week high of $3.06 achieved just before COVID-19 hit the Australian retail sector.

An incentive for shareholders in the current economic climate, Aventus has a dividend yield of 4.58% on today’s price.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. 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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