This article is from the Australian Property Journal archive
GPT’S retail property portfolio has taken a hit as result of the COVID-19 pandemic, the latest valuation has resulted in a $476.7 million fall as at 31 May.
Seven directly held retail assets were independently valued resulting in approximately 8.8% reduction compared to the 31 December 2019 book value.
In percentage terms Casuarina Square recorded the largest decline. GPT’s 50% interest fell by 16.6% or $41.2 million to $207.8 million with the cap rate expanding by 25 basis points to 6.25%.
Apart from Casuarina Square, four centres also recorded double digit declines, namely:
- Charlestown Square (100% interest) fell by 13.9% or $139.2 million to $865 million and the cap rate also ticked up 25 bps to 5.5%;
- GPT’s 16.7% interest in Highpoint shopping centre declined 13.6% or $56.5 million to $358.3 million with cap rates expanding 25 bps to 4.5%;
- Sunshine Plaza (50% interest) fell 10.9% or $75.1 million to $612.5 million and cap rates rose 25 bps to 5.0%;
- Similarly, Westfield Penrith (50%) also declined 10.9% or $80 million to $655.5 million.
Melbourne Central and Rouse Hill Town Centre recorded smaller declines and no change in cap rates. Melbourne Central’s valuation fell 2.6% or $41.7 million to $1,588.5 million whilst Rouse Hill declined by 6.5% or $43 million to $640.2 million, cap rates remained at 4.54% and 5.5%, respectively.
CEO Bob Johnston said the retail asset revaluations reflect the independent valuers’ assessment of the effects that COVID-19 and the subsequent social restrictions have had on the performance of its retail assets.
“This has generally been reflected in lower market rental growth rates, increased vacancy and abatement allowances and some softening in investment metrics,” he said.
Although Johnston said in recent weeks it has been pleasing to see a significant increase in activity at its centres as restrictions were eased.
“Across our regional shopping centres we now have approximately 90% of stores open and foot traffic has returned to approximately 85% of the level at the same time last year.” Johnston said.
Separately, all assets owned by GPT Wholesale Office Fund (GWOF) and the GPT Wholesale Shopping Centre Fund (GWSCF) have also been independently revalued. GWOF recorded a negative revaluation of $34 million, representing a decline in book value of 0.4% from the 31 March 2020 book value. GWSCF recorded a fall of $137.6 million, a 3.5% lower over the same period. GPT’s ownership interest in GWOF is 22.3%, while its ownership interest in GWSCF is 28.5%.
GPT has withdrawn its FY20 FFO and distribution guidance.
