Abacus Group - Preliminary Portfolio Valuation Update - 4 July 2024
ABG (ABG) Share Update July 2024 Thursday 4th
Abacus Group Reports Preliminary Portfolio Valuation Update
Abacus Group Holdings Limited (ASX: ABG) has reported a significant decrease in the valuation of its investment properties as of 30 June 2024.
Instant Summary:
- Estimated total decrease of $136 million in property valuations.
- 6.7% decline in book value from 31 December 2023.
- Expected reduction in pro forma net tangible assets (NTA) by $0.15 per security.
Valuation Details
The draft valuations, which include both external and internal assessments, show a total estimated decrease of $136 million, representing a 6.7% decline in book value from 31 December 2023. This decline is largely driven by cap rate expansion.
The unaudited valuations are expected to decrease the Group's pro forma net tangible assets (NTA) by approximately $0.15 per security, a 7.9% decrease from the 31 December 2023 NTA. These valuations are subject to finalization and audit, with final valuations to be released as part of the FY24 results on 23 August 2024.
Sector Breakdown
The valuation breakdown is as follows:
- Office Properties: $1.4 billion, WACR of 6.48%, cap rate change of +51 basis points, valuation change of -7.5%
- Retail/Other Properties: $0.5 billion, WACR of 6.58%, cap rate change of +22 basis points, valuation change of -4.6%
- Total Portfolio: $1.9 billion, WACR of 6.50%, cap rate change of +43 basis points, valuation change of -6.7%
The decrease in valuations reflects broader market trends, including cap rate expansion. This will likely affect Abacus Group's stock price as investors react to the reduced valuations. The expected decrease in NTA per security is significant and could impact investor sentiment.
Investor Reaction:
Analysts have noted that the cap rate expansion is a key driver of the valuation decline. Investor reaction has been mixed, with some expressing concern over the broader market implications.
Conclusion:
Investors should monitor the final valuation release on 23 August 2024 and assess the potential long-term impacts on their portfolios. Abacus Group's strategic response to these changes will be crucial in maintaining investor confidence.