COMMONWEALTH Property Office Fund has revalued independently revalued 10 of its 26 assets, resulting in a $32.7 million or 2.7% increase.
Fund manager Charles Moore said these valuations reflect the quality of the trust’s portfolio, the stability in market conditions and the impact of some positive rental reversions.
“Despite ongoing weakness in the financial sector, these valuations re-affirm the long-term investment proposition of quality Australian office property. Arguably, the investment proposition of office property has been further enhanced in recent times with a notable fall in risk-free rates of investment,” he added.
Major valuation movements include the $12.1 million, or 5.3%, uplift in the valuation of 175 Pitt St Sydney. This reflects the stabilisation of this asset post redevelopment and the asset’s long weighted average lease term.
46 Colin St West Perth, also reported a strong result after IAG Limited renewed its lease for five years over the whole of the building (8,760 sqm) commencing 7 October. The new rent of $580 per sqm net represents a 42.7% increase over the current passing rent.
After taking into account the current round of valuations and including this month’s acquisition and settlement of 10 Eagle St Brisbane, the portfolio weighted average capitalisation rate is 7.5%. This is unchanged since 31 March 2012, as was the portfolio weighted average discount rate of 9.3%.
The June 2012 quarter valuations follow the $6.8 million increase on prior book value recorded in the March 2012 quarter when four assets were valued.
The fund’s gross assets are estimated to have increased to approximately $3.7 billion at 30 June 2012, up from $3.5 billion at 31 December 2011. Net Tangible Asset backing per unit is estimated to be $1.15 up from $1.13 at 31 December 2011.
Property Review
