Vicinity portfolio drops $202m, but Chadstone value holding up well
One of the nation’s biggest shopping centre owners has just cut the value of its bumper portfolio as the property and retail sectors struggle. But the jewel in its crown is sparkling as bright as ever.
Business
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Shopping centre owner Vicinity Centres has taken a $202 million fall in its retail portfolio value during the past six months from the flagging property and retail sectors.
However, Vicinity, which owns 50 per cent of Melbourne’s Chadstone Shopping Centre, said the value of its premium properties was holding up well.
Falling values across regional centres and neighbourhood retail properties, particularly in Western Australia, had forced a 1.3 per cent writedown of its $15.8 billion portfolio, it said.
In a statement to the Australian Securities Exchange on Friday, Vicinity said it was in the final stages of receiving independent revaluations for 35 of its 62 retail properties, and the balance was being internally revalued.
From the reports to date, it estimated the portfolio would be down 1.3 per cent for the six months to June 30.
The final figure would be confirmed in its annual result, to be released in August.
Property revaluations were down 6.7 per cent for its WA shopping centres which made up more than half of the portfolio decline at $130 million.
However, the rest of the country performed reasonably well, as did premium property assets, Vicinity chief executive Grant Kelley said.
“Vicinity’s flagship portfolio — Chadstone, premium CBD assets and DFO outlets — has continued to outperform, demonstrating resilience and reinforcing our strategy to focus on market-leading destinations,” Mr Kelley said.
The company said its half share in Chadstone was now valued at $3.25 billion, an increase of 1.6 per cent during the six months.
“This world-class asset is Australia’s number one shopping centre with $2.2 billion in annual retail sales, which is 70 per cent higher than its nearest Australian peer,” Mr Kelley said. Its six DFO outlet properties increased in value by 2 per cent to $1.74 billion, while its capital city centre properties broke even during the six months with no change in their valuation of $2.46 billion.
However, Vicinity’s 17 regional shopping centres fell 4.5 per cent, down $235 million, to be revalued at $5 billion.
Its five neighbourhood centres lost 2.3 per cent, to $252 million, while 26 sub regional shopping centres were down 1.5 per cent to a total of $3.1 billion.
“Geographically, asset valuation gains are forecast to be positive in Victoria and in comparable centres across New South Wales, boosted by successful re-leasing strategies,” Mr Kelley said.
The company published its revaluation estimates ahead of its June 30 year end, to help facilitate a new bond issue.
“A potential bond issuance will extend our weighted average debt maturity, decrease our weighting to bank debt and, with the recent material fall in interest rates, enable us to take advantage of lower borrowing costs,” Mr Kelley said.
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