This article is from the Australian Property Journal archive
CFS Retail Property Trust (ASX: CFX) has independently revalued 17 assets resulting in a $44.0 million or 0.9% decrease.
The largest decrease was Myer Melbourne, falling $71.7 million or 14% to $441.7 million — due to changes to the scope of Emporium Melbourne.
Fund manager Michael Gorman said due to strong demand from international and luxury retailers for flagship stores, the project will now have a greater weighting towards these types of stores.
“Whilst these flagship stores typically have a greater level of landlord works involved, the modified design is likely to generate greater traffic flows to the basement and upper levels and also provide a greater quality of overall tenancy mix.
“The changes made to the scope of Emporium Melbourne will translate into a modest rise in the construction cost and lower initial income; however, with a much stronger retail offer and expected traffic flows we anticipate that the higher quality income generated will ultimately be valued at a tighter capitalisation rate on completion,” he added.
Decreases were also recorded at Altona shopping centre, down $14.7 million or 16.2% to $76 million impacted by the proposed replacement of a supermarket at the end of its lease; and Corio and Post Office Square, which have been impacted by competition in their trade areas. Corio values declined by $6.7 million or 5.5% to $115.8 million and Post Office Square declined by $4.2 million or 5.5% to $73 million.
With exception to those assets, Gorman said it is pleasing to see a continued valuation uplift across many properties, notwithstanding the tough retail environment, highlighting the stability of retail property markets.
“On the other hand, some smaller properties continue to show the impact of competition,” he added.
Following these revaluations, the shopping centre portfolio weighted average capitalisation rate has tightened marginally to 6.44% at 31 December 2012 from 6.45% at 30 June 2012.
CFX’s estimated gross assets of $8.5 billion at 31 December 2012 has increased from $8.4 billion at 30 June 2012, reflecting work undertaken on the development pipeline, partly offset by the valuation decline. Net Tangible Asset backing (NTA) per stapled security is expected to reduce slightly to $2.05 at 31 December 2012 from $2.07 at 30 June 2012 and gearing is expected to increase to 28.0% at 31 December 2012 from 26.6% at 30 June 2012.
Property Review
