Vicinity values fall

Vicinity Centres has announced that 35 of its 62 directly owned retail properties, representing 57 per cent of the value of its holdings, are in the final stages of being independently valued and the remaining properties are being internally valued. The estimated net valuation decline for the overall portfolio is 1.3 per cent, or $202 million, for the six months ending June 30.

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The June valuations are subject to finalisation and audit and will be confirmed in Vicinity’s annual report on August 14.

Grant Kelley, CEO and managing director, said that the valuation decline was mainly driven by properties in Western Australia and predevelopment centres.

He said that Vicinity’s flagship portfolio – Chadstone, premium CBD assets and DFO outlets – continued to do well.

“The flagship portfolio is forecast to increase in value by $86 million, or 1.2 per cent, in the period, driven by income growth, with capitalisation rates remaining unchanged on an individual asset basis,” Kelley said.

Kelley said the company had released its estimates earlier than June 30 to facilitate an opportunity to issue bonds in debt capital markets.

He praised the contribution of Chadstone to the overall portfolio performance, saying, “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.”

He said that CBD centres in Sydney – the Queen Victoria Building, the Strand Arcade and The Galeries – had benefited from rereleasing strategies.

Centres in development – which included such properties as Chatswood Chase in Sydney and the Myer Centre in Brisbane – showed weakness, but Kelley believed that planned redevelopments of these centres would significantly enhance their performance and attractiveness.

He said that Vicinity remained committed to WA despite the 6.7 per cent decline in its properties there. He said that continued investment in resources and infrastructure in the state would turn around trading conditions, given time.

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