This article is from the Australian Property Journal archive
THE Commonwealth Property Office Fund has upgraded its FY2012 distribution guidance for a second time this year from 5.85 cents per unit to 6.09 cpu.
Fund manager Charles Moor said the new distribution is 10.7% above FY2011 distribution and the upgrade is the result of the positive benefits from the unit buy-back program and the manager, Colonial First State Property Limited no longer forecasting a performance fee being paid this year.
As at 31 March 2012, CFSPL had acquired 42.6 million units as part of the on-market unit buy-back for $41.0 million, at an average price of 96.4 cents per unit.
Over the three-month period to 31 March 2012, four of the fund’s 25 office assets were independently revalued, resulting in a 0.9% or $6.8 million increase.
The March quarter revaluations, combined with units cancelled under the unit buy-backs, contributed to the fund’s net tangible asset backing per unit increasing to $1.14 at 31 March 2012, up from $1.13 at 31 December 2011. The portfolio weighted average capitalisation rate remains at 7.5% at 31 March 2012, unchanged from 31 December 2011.
During the period CPA leased over 6,794 sqm of space and terms were agreed over a further 31,770 sqm. However, the portfolio occupancy rate has declined from 97.2% at 31 December 2011 to 96.3% (by income). SPI Powernet entered into a major leasing deal at 2 Southbank Boulevard, extending its lease to September 2015 over 5,800 sqm of space.
Rent reviews were conducted over 72,343 sqm of space resulting in an average rental increase of 4.1%.
Moore said tenant demand continues to vary between the nation’s major office markets, led by the contrast of a mining boom in the resource rich states of Queensland and Western Australia and a finance sector downturn in Victoria and NSW.
Having said that, he said CPA is exceptionally well placed.
“This will continue to result in divergent rates of tenant demand across Australian office markets in the short term, although supply levels are generally expected to remain moderate which will assist to maintain vacancy levels at around long-term averages. Despite these continuing near term challenges, which are impacting business confidence, and tenant demand in some markets, we expect total returns for Australian office property to average 10% to 12% per annum over the next five years.”
“Given the continuing consolidation in the A-REIT office sector, we are presently evaluating the fund’s performance fee benchmark, and we are also reviewing the distribution policy. We anticipate these reviews will be complete by July 2012. In the meantime, we look forward to delivering on our upgraded FY2012 distribution guidance,” he concluded.
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