This article is from the Australian Property Journal archive
THE Mirvac Industrial Trust said softer market conditions in the Greater Chicago area has contributed to a 17.5% fall in operating profit for the first half year.
MIX delivered an operating profit of $7.77 million for the half year ended December 31 2009 compared to $9.4 million in December 2008. Net property income reduced from $21.36 million to $17.15 million.
Trust manager Nicholas Blake said the result is in line with expectations given the soft market conditions in the Greater Chicago area and the conservative approach.
“Operating conditions remain difficult however indications point to stability and a positive but uneven recovery,” he added.
Valuations undertaken during the period and resulted in a decline of $US21.96 million or 5.0% on the book value at June 30 2009.
A total of 31 assets or 36.3 % of the total portfolio by book value, were externally valued resulting in a weighted average capitalisation rate of 9.06 %, an increase of 37 basis points. The remaining 33 assets were internally valued resulting in a weighted average capitalisation rate of 8.84 %, an increase of 26 basis points.
The trust’s Net Tangible Assets decreased from $0.24 per unit at June 2009 to $0.17 per unit, a decrease of 29.2%.
Blake said the NTA was impacted by both a strengthening of the Australian dollar and the downward movement in Trust’s asset valuations over the period.
“Values of the trust’s assets have fallen approximately 35 % from their peak in 2007, with the valuations for the six months ended 31 December 2009 accounting for the smallest valuation decrease since the downturn commenced in December 2007. It now appears the rate of decline in value of the trust’s assets is abating and asset values are expected to plateau in the near term,” he continued.
The trust signed 1.8 million sq ft of leases during the period. Leases were executed over a further 305,355 square feet to February 16 2010.
Blake said the difficult operating conditions in the Greater Chicago area in 2008 and 2009 are now being replaced by increased demand for industrial assets, translating into meaningful leasing enquiry.
“Markets suggest rental rates are beginning to stabilise,”
Gearing is currently at 82.7%.
Blake said the global expressions of interest campaign undertaken by the trust concluded in mid December 2009 without an unconditional agreement being reached.
“Management continues to remain focused on improving the operating performance and financial position of the trust over the next 24 months,”
The trust has forecast earnings of 3.1 to 3.3 cents per unit for the year ended June 30 2010 remains unchanged.
Distributions for FY10 remain suspended, with retained earnings to be reinvested into the trust.
Australian Property Journal
