Region Group shows a 3% decline in like for like asset values

12 December 2022

Region Group (previously Shopping Centres Australia) announced the results of its property valuations at December 2022 showing a 3% drop in like for like asset values.

The value of the assets moved lower as a result of a softening of cap rates by 23bps over the 6 months.

The total value of RGN’s Investment Properties has increased by $25.8m, from $4,460.9m at June 2022 to $4,486.7m as at December 2022.

This movement is comprised of:

  • Valuation decrease in ‘like-for-like’ properties of $131.2m (decrease of 3.0%);
  • Acquisitions completed during the period of $180.0m; and
  • Disposal of $23.0m, being Carrara, QLD which has been contracted for sale at $23.5m (increase of 2.2% on June 2022 book value of $23.0m). This transaction is expected to settle early next year.

Across the like-for-like portfolio, 20 were valued externally and make up $45.1m of the total decrease in valuation (decrease of 4.7%). The remaining 70 centres were internally valued and make up $86.1m of the total decrease in valuation (decrease of 2.5%). Details of portfolio movements, including a comparison of independent and internal valuations, are set out in the next table.

The valuation decrease across like-for-like properties of $131.2m (decrease of 3.0%) is mainly due to:

  • Capitalisation rate softening of 23bps, from 5.44% at June 2022 to 5.67% at December 2022; and
  • Discount rate softening of 23bps, from 6.17% at June 2022 to 6.40% at December 2022.

In July 2022, Region acquired a portfolio of 5 assets from Centuria (Primewest) for $180.0m at a weighted average cap rate of 5.66% and contracted to sell an asset, Carrara, QLD, for $23.5m (2.2% above June 2022 book value of $23.0m).

Region also advised that the year end Net Tangible Assets per unit will also be impacted by capital expenditure during the period and movements in other balance sheet items such as the valuation of derivatives.