This article is from the Australian Property Journal archive
Centro Retail Trust has delivered its inaugural annual distributable operating earnings of $54.2 million for the year to June 30, 2006.
In the 12 months to June 2006, CER recorded a net profit of $227.96 million, including a revaluation gain of 8.2% totalling $153 million from 47 shopping centres in Australia and the United States.
The Australian portfolio is now valued at $1.2 billion and the US portfolio at $1.0 billion.
CER’s chairman Brian Healey said the success of CER since its listing debut in August 2005 has been very pleasing.
“CER outperformed its initial Product Disclosure Statement forecast expectations for net tangible asset growth, property performance, development results and lower gearing. CER’s operating profit result is in line with the initial PDS forecast and equates to operating earnings and distributions of 12.0 cents per security,” he added.
Healey said CER has benefited from the substantial value adding development program that was undertaken across the CER portfolio during the 2006 financial year.
“This is evidenced by the successful completion of eight Australian and two US development projects including major projects at Centro Colonnades, Centro Mildura, Centro Goulburn and Ocean Heights on the US East Coast. The completed projects are expected to deliver a strong 8.8% stabilised average yield on investment to CER investors,” he added.
Centro’s chief executive Andrew Scott said the strong revaluation gains in CER’s property portfolio have significantly contributed to the 42 cents per CER security increase in CER’s NTA to $1.92 per security.
“Quality Australian retail property continues to be an asset class that is justifiably highly sought after by investors, due to its strong, consistent and continuing performance over more than 20 years.
“The impressive revaluation gains evidence the ongoing yield reductions for retail property resultant from this investment demand. CER is very pleased to be able to offer its investors a portfolio of high quality assets at an average capitalisation rate of 6.13% for Australian and 6.42% for US assets,” Scott added.
Following the property revaluations CER’s effective book gearing post the June 2006 distribution reinvestment plan is 53%, significantly lower than the 58% at listing and well below policy guidelines.
“CER’s prudent foreign currency and interest rate risk management ensures that CER is well placed to continue to deliver stable and reliable income to investors. CER has extensive interest rate protection with 90% of its Australian borrowings fixed for an average maturity of 5.3 years and 100% of the US borrowings fixed for a very long 8.5 years.
“CER’s US income exposure is also very well covered. An average 89% of the forecast US sourced income is now hedged until 2013. The recent additional US equity hedging has also resulted in a significant extension to the average maturity to a long 5.0 years,” Scott said.
CER has forecast 5% DPU Growth of 12.6 cents in FY07.
CER shares closed 1.5 cents higher at $1.60.
By Adam Parsons
