CFS Retail Property Trust has recorded a net profit of more than $605 million, including net revaluations to 21 of $361 million for the 12 months ended June 30, 2006. The former CFS Gandel Trust, renamed in April to CFS Retail Property Trust experienced a 21% increase in net profit over the previous 12 months.
Net profit in the previous financial period totalled $500 million including $291 million in revaluations.
Total revenue jumped $163 million while expenses jumped from $183 million in 2005 to $241 million in the latest financial period.
CFX Fund Manager Michael Gorman said the trust had delivered on its identified strategic objectives for the 12 months to 30 June 2006 in a number of key areas.
Gorman said CFX had grown its asset base through acquisition and development project completions; replenished its development pipeline; and extracted value for unitholders through active management of the retail property portfolio.
Gorman added that CFX’s ability to constantly reposition assets in the portfolio through development and leasing activity assisted by strong asset revaluations for the period had resulted in the Trust’s Net Tangible Asset backing increasing from $1.52 to $1.71.
Gorman said key contributors to the 2006 increased profit result included the completion of the Elizabeth Shopping Centre in South Australia; Stage 1 of Queens Plaza in Queensland and Corio Shopping Centre and Bayside Shopping Centre redevelopments in Victoria.
No doubt also contributing to CFX’s improved performance was an increase in underlying net property income of 6.6% from existing assets on a like-for-like basis.
Gorman said the income stream related to the flowback to the Trust from the earnings of Colonial First State Property Management also contributed strongly with income of $9.4 million, up from $7.6 million in the previous corresponding period.
CFX paid an annual distribution of $230.3 million, compared to $208.1 million for the previous corresponding period. The distribution paid to unitholders comprised of distributable income of $221.9 million and a net transfer from equity of $8.4 million.
A distribution of 11.1 cents per unit will be paid for the 12-month period, compared to 10.51 cents per unit for the 12 months to 30 June 2005. This reflects distribution per unit growth of 5.6%, marking a positive result for unitholders.
Gorman added that in future, distributions will continue to be based on the Trust’s distributable income after adjusting for the impact of transfers from equity to cover adjustments for capital items, amortisation of the intangible asset – until 2007 – and, if applicable, any performance fees.
CFX delivered unitholders a strong total return of 17.6% for the 12 months ended 30 June 2006, exceeding the UBS Retail 200 Property Accumulation Index return of 7.9%, and slightly below the S&P/ASX Property 200 Accumulation Index return of 18%.
CFX reported that as at 30 June 2006, its property portfolio comprised 24 retail assets. The Trust’s total gross value of its investment properties was $5.2 billion, reflecting growth of 14.7% over the previous corresponding period.
Gorman commented that retail sales growth across Australia has moderated over previous years due predominantly to the impact of petrol prices and higher interest rates.
“Whilst this has had a small impact on the overall CFX portfolio, the benefits of the Trust’s diversified portfolio of non-discretionary and discretionary-based centres were clearly demonstrated.
“In addition, significant remixing activity and the completion of significant redevelopment projects has strengthened the Trust’s performance and repositioned many centres.”
In the 12 months ended 30 June 2006, CFX’s portfolio recorded total sales growth of 6.5%. Sales growth in centres not under redevelopment and which have not been redeveloped within the past two years (ie comparable sales growth) was 1.4% over the same period. Specialty shop sales growth remained solid, showing total sales growth of 7.5% and comparable sales growth of 1.0%.
Over the 12 months to 30 June 2006, progress continued on CFX’s $840 million development pipeline, focusing on enhancing and repositioning assets within the portfolio. Completed development works costing $540 million were achieved during the year ended 30 June 2006.
Gorman said Colonial First State Property Management’s skills and experience in managing and developing retail property will continue to drive performance of the Trust’s assets.
“The successful opening of Stage 1 of QueensPlaza, the remarkable transformation of the Elizabeth and Corio shopping centres and the major addition to Bayside Shopping Centre, repositioned these assets to the benefit of the Trust’s customers and retailers,” Gorman said.
“These completed developments also provide significant earnings and net tangible asset value uplifts for the Trust’s investors.”
Gorman said key sources of growth for CFX in the year ahead were anticipated to be driven by the replenished redevelopment pipeline, including the start of a 40,000 sqm redevelopment of the Chadstone Shopping Centre, as well as organic growth from within the portfolio.
“The Manager will continue to identify new opportunities to complement the Trust’s existing portfolio with acquisitions where they add strategic value,” Gorman concluded.
By Adam Parsons
