CFS Retail Property Trust has continued to record sales growth at its centres, albeit at a slower pace and the trust forecasts turnover will further decelerate in the 12 months ahead.
For the 12 months ended September 30 2008, the trust’s 24 properties portfolio generated retail sales growth of 3.8% – up $230 million to $6.4 billion.
Moving annual turnover growth was strongest in mini majors with an increase of 8.4% to $547.7 million, supermarkets were up 5.2% to $1.35 billion and retail specialty stores reported 4.4% growth to $2.55 billion.
Comparable sales growth in the major anchors was mixed with discount department stores sales up 4.1% to $514.7 million but department stores sales were down 3.2% to $185.5 million.
CFX fund manager Michael Gorman said despite strong sales growth in both July and August, the month of September did show signs of slowing as the negative sentiment surrounding the global economic slowdown started to impact the Australian consumer.
The trust’s gearing currently stands at approximately 25% and Gorman said CFX has deferred the start of approximately $200 million in redevelopment projects principally at sub-regional shopping centres in the trust’s $1.6 billion development pipeline, which further reduces the reliance on debt in the current volatile environment.
“Our continual focus on improving our financial strength to support the ongoing capital requirements for the trust, puts us in a strong position in the current environment,” he added.
In the three months to September quarter, seven shopping centre were independently revalued resulting in a fall of $32.7 million or 3.3%. As a result, the net tangible asset backing is expected to reduced to $2.30 per unit at September 30 from $2.32 as at June 30.
The portfolio weighted average capitalisation rate softened marginally from 5.77% as at June 30 to 5.84% as at September 30.
Looking ahead, Gorman said Australian regional shopping malls are expected to remain relatively resilient through the current economic turbulence, with income supported by tightly controlled supply and a broad base of daily need oriented tenants, as well as those of a more discretionary nature.
“Over the next 12 months, we expect to see signs of a softening in retail sales growth across the CFX portfolio, reflecting the weaker conditions in the broader economy.
“In the CFX portfolio we expect to see retail sales growth slow to approximately 3% to 4%,” he continued.
But Gorman remains confident of the distribution projection of 12.5 cents per unit, in line with consensus, for the year ending June 30 2009.
Australian Property Journal
