Kiwi Property Group Ltd has made a 1.5% ($47 million) net gain in fair value of its portfolio property, now worth a total $3.2 billion.
Chief executive Clive Mackenzie said of the gain for the year to March: “Our property portfolio has benefited from a strong investment market, with robust international capital inflows contributing to a firming in the weighted average investment portfolio capitalisation rate.
“This year we have made an important change to our asset classifications, recognising the evolution of our strategy, which increases our focus on intensifying some of our holdings to create mixed-use communities.”
Kiwi Property has added a mixed-use asset class classification to the 2 previously used, retail & office, and it was a better performer.
“Our mixed-use portfolio includes those assets that are strategically located in centres of higher population growth, close to town centres or key transport linkages and have existing or longer-term potential to develop a variety of uses on site including retail, commercial, entertainment, hotel, residential or civic uses,” Mr Mackenzie said.
“Our mixed-use portfolio, comprising Sylvia Park (including Sylvia Park Lifestyle), LynnMall & The Base, has grown in fair value by $20 million, or 1.3%. Our mixed-use assets are collectively valued at $1.53 billion ― 48% of Kiwi Property’s overall holdings ― and provide a weighted average capitalisation rate of 5.71%, in line with March 2018.”
“Our retail portfolio has decreased in fair value by $28 million, or 4.5%, primarily as a result of softening capitalisation rates for this asset class, together with, in some instances, an increase in seismic-related expenditure. With a total value of $598 million ― less than 20% of Kiwi Property’s overall holdings ― our retail portfolio has a weighted average capitalisation rate of 7.53%, 23 basis points higher than last year.”
“Our office portfolio performed very strongly over the 2019 financial year, with fair value growth of $53 million, or 6.3%. Growth was positive across both Auckland (+6.5%) & Wellington (+5.6%) assets, driven by not only strong market sentiment & demand for this asset class but also the quality of the buildings in Kiwi Property’s portfolio.
“Our office portfolio, at a total value of $893 million, comprises 28% of Kiwi Property’s overall holdings. The portfolio weighted average capitalisation rate has firmed 31 basis points since March 2018 to 5.45%.”
Kiwi Property revaluations at March 2019/Kiwi Property chart
The valuations were determined by independent valuers and will be confirmed in the company’s audited financial results, to be announced on 20 May.
8 April 2018: Kiwi Property gets 1.1% portfolio rise
Attribution: Company release.