Australand Property Group, a wholly-owned Australian unit of CapitaLand, has announced that its net profit in the first half of 2011 rose 17 percent to A$84.8 million, while its operating profit climbed seven percent to A$64.9 million.

Bob Johnston, Managing Director of Australand, said the company will continue to make solid progress in each of its core operating divisions.

“We have retained a strong focus on prudent capital management, successfully entering into new capital partnering relationships and maintaining gearing well within our target range. Trading conditions moderated during the second quarter in line with weaker consumer and business confidence, however, residential sales and contracts on hand remain in a healthy position and our office and industrial investment portfolio remains well leased.”

In the investment property division, Johnston said earnings underpin the company’s distribution. The company’s portfolio metrics remain strong, with high occupancy, long leases and fixed rental growth providing good visibility of earnings from the division, he noted.

Australand’s combined development earnings before interest and taxes (EBIT) rose 12 percent, with A$12.9 million EBIT for the commercial and industrial division and A$25.7 million EBIT for the residential division.

Johnston noted that the commercial and industrial division successfully completed three external and three internal industrial projects, with a combined end value of A$134 million. The division also established a logistics joint venture (JV) with GIC, targeting a total investment size of A$450 million, with the group holding a 19.9 percent co-investment in the JV.

Meanwhile, the residential division saw a strong increase in lot sales, with most of the activity in the Sydney and Melbourne markets.

“We achieved strong growth in lot sales over the half and have a healthy level of contracts on hand, most of which we expect to recognise in the second half. Demand, however, softened in the second quarter with trading conditions in South East Queensland particularly challenging.”

The company continues to make good progress towards achieving its strategic outlined objectives, including maintaining focus on the core industrial, office and residential sectors, providing investors with a mix of recurrent earnings from its investment portfolio and growth through its development activities, improving development returns and maintaining a prudent approach to capital management.

“While we remain cautious in our outlook, the Group continues to deliver on its strategic objectives and is well positioned to meet its targets for the remainder of 2011,” said Johnston.

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