Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


KIP portfolio valuation update

NZX RELEASE

2 April 2014

KIP portfolio valuation update

Kiwi Income Property Trust today reported a net increase of $17.8 million (+0.8%) in the value of its portfolio of shopping centres and office buildings for the year ended 31 March 2014. The overall value of the Trust’s property portfolio stands at $2.1 billion.

The valuations were determined by independent valuers, are subject to final audit and will be confirmed in the Trust’s financial results for the year to 31 March 2014 to be announced on 20 May 2014.

As at 30 September 2013 the Trust independently revalued three assets – Vero Centre, ASB North Wharf and Unisys House. A second-half increase of $13.4 million, recorded predominantly through the office portfolio, built on the $4.4 million positive revaluation recorded in the first half.

Mr Mark Ford, Chairman of the Manager of the Trust, said: “Strong investor demand for prime Auckland assets has been a continuing trend. Consistent with this, all of the Trust’s Auckland assets increased in value with Sylvia Park Shopping Centre, Vero Centre and ASB North Wharf collectively delivering revaluation gains of $55.6 million.”

The weighted average capitalisation rate for the portfolio has firmed 32 basis points to 7.19% and the independent valuations indicate that over-renting across the portfolio is approximately 1.0%.

Retail portfolio valuation

The Trust’s flagship asset, Sylvia Park Shopping Centre in Auckland, increased in value by $21.8 million (+4.0%) to $564.0 million reflecting a continuation of the centre’s market dominance and strong trading performance. Growth in value over a two-year period for this prime regional shopping centre has been an impressive $58.7 million (+11.7%).

Notwithstanding, in the year to 31 March 2014, the value of the Trust’s retail portfolio decreased $4.5 million (-0.3%) to $1.4 billion due to allowances made in valuations for earthquake strengthening and remedial work at three of the Trust’s shopping centres and a lower than anticipated valuation of Centre Place Shopping Centre in Hamilton following completion of its redevelopment in October 2013.

The value of Centre Place, at $122.5 million, reflects the competitive operating environment in Hamilton and resulted in a $13.6 million (-10.0%) revaluation loss.

The value of Northlands Shopping Centre in Christchurch reduced by $9.0 million (4.2%) consistent with updated provisions made in the valuation for earthquake remedial works that are the subject of an ongoing insurance claim. A formal mediation is underway with the Trust’s insurers with the intention of securing a settlement towards the middle of this year.

Similarly, the value of North City Shopping Centre in Porirua reduced by $4.0 million (4.0%) largely as a result of a capital expenditure allowance made in the valuation for seismic strengthening to parts of the centre.

The value of the Trust’s other shopping centres, LynnMall Shopping Centre in Auckland and The Plaza Shopping Centre in Palmerston North, remained essentially unchanged at $206.0 million and $196.0 million respectively.

On a like-for-like basis, the weighted average capitalisation rate for retail assets firmed 14 basis points over the year, from 7.31% to 7.17%.

Office portfolio valuation

In the year to 31 March 2014, the office portfolio increased in value by $19.7 million (+3.0%) driven predominantly by improving fundamentals in the Auckland office market and positive leasing outcomes at 205 Queen. Valuation gains have largely resulted from capitalisation rate firming, with continued strong demand for investment-grade assets and anticipated improvement in office rents.

Vero Centre in Auckland increased in value by $24.9 million (+9.1%) over the year, with the capitalisation rate firming 62 basis points to 6.88%. The capitalisation rate for the Trust’s newest asset, ASB North Wharf, also firmed to 6.88% increasing its value by $8.8 million (+5.8%) to $162.2 million as at 31 March 2014, comparing favourably to its $134.0 million development cost.

Positive leasing outcomes at 205 Queen have resulted in the building’s vacancy rate reducing from 22.5% at September 2013 to 9.2% at March 2014, and led to a $5.6 million (+11.0%) increase in value for the Trust’s remaining 50% interest1.

1 In October 2013, the Trust entered into an agreement to sell a 50% interest in the asset for $47.5 million. The sale settled on 31 January 2014.

In November 2013 the Trust announced a new 18-year New Zealand Government lease commitment at 56 The Terrace (Unisys House) Wellington, as part of a comprehensive $67 million refurbishment of the 45-year-old office complex. In recognition of the impending departure of existing tenants and the development works, the value of the building has been adjusted downwards by $15.3 million (22.3%) to $53.4 million as at 31 March 2014. Following redevelopment, and on commencement of the Government’s new lease in August 2016, it is projected that the building’s value will be approximately $120.5 million.

The overall value of the office portfolio now stands at $674.6 million with a like-for-like weighted average capitalisation rate of 7.36%, 47 basis points firmer than the prior year.

Chief Executive of the Manager of the Trust, Mr Gudgeon, concluded: “Office market fundamentals in Auckland are positively assisting our leasing efforts and should lead to rental growth over the medium term.”

A full valuation summary as at 31 March 2014 has been provided to NZX with this announcement.

ENDS

2014.04.02_KIP_portfolio_valuation_update.pdf

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Scoop Business: NZ Dollar Falls To 3-Year Low As Investors Favour Greenback

The New Zealand dollar fell to its lowest in more than three years as investors sold euro and bought US dollars, weakening other currencies against the greenback. More>>

ALSO:

Scoop Business: NZ Govt Operating Deficit Smaller Than Expected

The New Zealand’s government’s operating deficit was smaller than expected in the first five months of the financial year as a clampdown on expenditure managed to offset a shortfall in the tax-take from last month’s forecast. More>>

ALSO:

0.8 Percent Annually:
NZ Inflation Falls Below RBNZ's Target

New Zealand's annual pace of inflation slowed to below the Reserve Bank's target band in the final three months of the year, giving governor Graeme Wheeler more room to keep the benchmark interest rate lower for longer.More>>

ALSO:

NASA, NOAA: Find 2014 Warmest Year In Modern Record

Since 1880, Earth’s average surface temperature has warmed by about 1.4 degrees Fahrenheit (0.8 degrees Celsius), a trend that is largely driven by the increase in carbon dioxide and other human emissions into the planet’s atmosphere. The majority of that warming has occurred in the past three decades. More>>

ALSO:

Scoop Business: New Zealand’s Reserve Bank Named Central Bank Of The Year

The Reserve Bank of New Zealand’s efforts to stifle house price inflation by using new policy tools has seen the institution named Central Bank of the year by Central Banking Publications, a publisher specialising in global central banking practice. More>>

ALSO:

Science Media Centre: Viral Science And Another 'Big Dry'?

"Potentially, if there is no significant rainfall for the next month or so, we could be heading into one of the worst nation-wide droughts we’ve seen for some time," warns NIWA principal climate scientist Dr Andrew Tait. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news