This article is from the Australian Property Journal archive
SHOPPING centres owner Region Group posted a $95.1 million first-half loss after writedowns on the value of its small suburban shopping centres, but saw a positive set of sales and turnover numbers.
The group, recently rebadged from SCA Property Group, saw a $131.2 million fall in property valuations over the six months across its $4.49 billion portfolio. Its total portfolio value grew by $25.8 million due to the $180 million acquisition of five convenience-based shopping centres in South Australia, Queensland and Western Australia in July, while it sold off Carrara Shopping Centre.
The total portfolio weighted average capitalisation rate is 5.67% with sub-regional centres expanding to 6.12% and neighbourhood centres at 5.50%.
Funds from operations lifted 0.2% on the prior corresponding period, driven by the increased cost of debt. Adjusted funds from operations (AFFO) increased 5.9% to $85.7 million, driven by comparable property net operating income growth of 4.2%, which rising interest rates brought down from 11.1%.
AFFO per security lifted 3.4% to 7.6c per security, and distributions were up 4.2% to 7.5c per security.
Moving annual turnover(MAT) across its shopping centres grew by 3.6%, with specialty store MAT up 5.8%. Compared to the end of 2019, total MAT has grown 12.2%, with supermarkets up 11.1% and specialties by 13.6%.
Leasing spreads increased to 4.4% over the period, with a retention rate of 85.0%. Specialty vacancies improved to 4.9% and portfolio occupancy was 98.0%.
“The last six months have continued to prove the resilience of our convenience-based shopping centres,” said Region Group CEO Anthony Mellowes.
“Tenant sales have grown across all sales categories, with non-discretionary sales increasing by 6.4%. Anchor tenant sales have continued to grow with an additional four tenants paying turnover rent. Our leasing spreads, average specialty gross rent and sales productivity have shown positive results.”
Region said it expected increased interest rates to negatively impact earnings for FY23. Full-year AFFO guidance is 15.2c per security.
