This article is from the Australian Property Journal archive
CFS Retail Property Trust has capped off a busy year with a $1.12 billion net profit result for the 12 months to June 2007, up 83.7% over the previous year result of $605.9 million.
The net profit result includes asset revaluations gain of $852.4 million, a net gain on financial derivatives revaluations of $28.1 million and straight-lining rental revenue of $6.0 million; and a net transfer from equity representing adjustments for capital items of $8.1 million.
The trust’s total distributable income was $234.5 million, compared to $219.1 million for the previous corresponding period.
CFX’s fund manager Michael Gorman said the 2007 financial year was a particularly favourable year for the trust, with strong income growth, significant asset valuation uplifts, major development completions and new project starts, combined with enhanced team capabilities in transactions, property management and funds management.
“We capped off what was already a very busy year with the proposed acquisition of Chatswood Chase and, post the reporting period, the acquisition of an interest in the Myer Melbourne site and a 100% interest in a strategic parcel of land opposite our Castle Plaza Shopping Centre,” he added.
Gorman said retail sales have also enjoyed a favourable environment, buoyed by strong employment growth, government fiscal stimulus and positive consumer confidence.
“What we have seen in the CFX portfolio is total sales growth of 6.4%, or 4.1% on a comparable basis. Importantly, specialty shop sales growth was strong, showing total sales growth of 7.8% and comparable sales growth of 5.2%. This reflects the intensive tenant remixing and management efforts across the portfolio,”
Gorman said retail sales growth strengthened in the 2007 financial year, with consumers effectively absorbing the impact of two interest rate rises, plus an additional interest rate rise in the previous financial year.
“In Queensland and Western Australia, the recent resource and population boom has positively translated into strong sales growth in those states. Retail sales in Victoria and South Australia are performing solidly, while NSW is clearly in recovery, although retail sales growth is not as strong as in the resource-led states,” he said. “These positive influences on retail sales are expected to continue in the short to medium term, although the potential for volatility in interest rates and oil prices could dampen consumer confidence in the short term.”
As for the trust’s future, Gorman said that with the increase in the trust’s development pipeline and acquisitions made within the last year, the trust was in a solid position to deliver long-term benefits to unitholders.
The trust’s total gross assets increased to $6.4 billion as at June 30 2007, reflecting growth of 19.7% over the previous corresponding period.
CFX has a $1.1 billion development pipeline and the acquisitions of Myer Melbourne, Chatswood Chase and the Hills Industries site are anticipated to grow that pipeline to $1.7 billion.
Projects currently under construction or approved are valued at approximately $310 million and are targeting an average yield of approximately 8.0% on first year income.
“We have replenished and increased the trust’s development pipeline, a key driver of future value, and grown the asset base to further enhance revenue streams over the longer term.
“Development is a very significant driver of value to the trust and we are continually seeking ways to enhance our existing portfolio of assets to meet customer demand,” Gorman said.
The trust will pay a distribution of $246.5 million, compared to $230.3 million for the previous corresponding period. This equates to a distribution of 11.60 cents per unit, which is a 4.5% increase on the 11.10 cents per unit paid for the previous financial year.
CFX shares gained 2 cents, closing at $2.15 yesterday.
Australian Property Journal
