Electricity and cleaning efficiency reduces Federation Centres overheads

Federation Centres, which has 65 retail assets owned or co-owned, had advised its occupancy rate is maintained at 99.5%.

Its net operating income grew by around 3.7% compared to 2.2%, underpinned by total rental growth of 3.2%.

Specialty store sales growth of 2.3% was achieved compared with 2.0% on a moving annual turnover basis, in announced in its half year results today.

Federation Centres CEO and managing director, Steven Sewell said it was "very pleasing that positive leasing spreads were achieved across all three centre types for both renewals and new leases".

“Careful management of overheads during the half year led to a significant reduction.

"An improved procurement process for costs such as electricity and cleaning was a key drive.

"The newly commissioned IT platform will provide ongoing opportunities to more efficiently manage our business as well.

"Simplification of the corporate structure from a quadruple to dual stapled security will also assist in managing the business efficiently." 

Its statutory net profit of $222.5 million was down 1.9% from $226.7 million with underlying earnings of $129 million up 8.6%. 

Overheads were reduced by 3.3% or $0.7 million on a larger portfolio. 

On its proposed merger with Novion Property Group, Steven Sewell said it was a "unique opportunity to create an investment portfolio that provides both immediate synergy benefits and material value creation along with significant long term benefits such as increased relevance to debt and equity investors, improved growth opportunities and enhanced asset, geographic and tenant diversification".

The merger proposal is unanimously endorsed by the board of Federation Centres, as well as the Novion Board and Novion’s largest securityholder the Gandel Group.