Abacus Group’s FY25 Profit Jumps $268m, Distribution Holds at 8.5c

A Return to Profitability

Abacus Group (ASX, ABG) has reported a significant turnaround in its FY25 financial results, posting a statutory profit of $26.9 million compared to a loss of $241 million in the previous year. This rebound reflects a combination of stable rental income, disciplined cost control, and strategic portfolio management amid a cautious commercial property market.

The group’s funds from operations (FFO), a key measure of cash earnings, edged up 1.7% to $82.7 million, underpinning the steady distribution per security of 8.5 cents. This payout remains fully franked at 50%, providing a reliable income stream for investors despite broader economic uncertainties.

Resilient Commercial Portfolio

Abacus Group’s commercial property portfolio, valued at approximately $1.5 billion, demonstrated resilience with like-for-like rent growth of 4.3% and occupancy rising slightly to 91.1%. The office segment, which comprises 56% of total assets, benefited from strong leasing activity with net face leasing spreads of 5.8%, although the weighted average capitalisation rate (cap rate) expanded modestly to 6.82%, reflecting market valuation pressures.

Retail assets, making up 16% of the portfolio, maintained high occupancy at 95.5% and delivered 3.5% rent growth. Meanwhile, Abacus’s 19.8% stake in Abacus Storage King (ASK) contributed to income growth, with ASK’s assets increasing in value by nearly 12% and funds from operations per security rising 3.3%.

Capital Management and Strategic Positioning

Capital management remains a strength for Abacus Group, with gearing slightly higher at 34.5% but well within target levels, and liquidity sufficient to support over $230 million in acquisition capacity. The weighted average cost of debt rose to 5.1%, reflecting the rising interest rate environment, but the group has hedged 79.7% of its drawn debt to mitigate volatility.

Importantly, Abacus is actively pursuing growth opportunities, including the ongoing due diligence on a revised acquisition proposal for ASK. The ASK Independent Board Committee has granted a six-week period for the consortium to develop a binding offer, which could reshape Abacus’s exposure to the self-storage sector.

Sustainability and Operational Focus

Abacus Group continues to advance its environmental, social, and governance (ESG) agenda, reporting a 61% reduction in greenhouse gas emissions intensity since FY19 and targeting net zero emissions by 2030. Operational priorities include cost control, portfolio construction, leasing initiatives, and technological improvements such as the recent launch of the Yardi platform to enhance asset management efficiency.

Looking ahead, the group maintains a confident outlook for FY26, guiding for a stable distribution of 8.5 cents per security and emphasizing its commitment to recurring income and value creation despite ongoing market headwinds.