Profit dip sees Chadstone trim
In doing so, the trust revealed it had trimmed the size of its proposed expansion at Chadstone Shopping Centre by about 5000 square metres to 20,000 square metres to "de-risk" the project in the weaker market for apparel and discretionary items.
Before the one-off items there was a 3.5 per cent increase in distributable income to $384.6 million, which was in line with the measure used by analysts.
The trust, which is the subject of internalisation from its manager, the Commonwealth Bank, reported a full-year distribution of 13.6¢ per security, up 3.8 per cent, and forecast a payout of 13.3¢-13.7¢ for the coming year, depending on assets sales of up to $500 million.
These assets include four centres in Victoria that were to be sold to the proposed Pacific Retail REIT, which has been put on hold until conditions improve.
During the year, like-for-like net property income from tenants increased 2 per cent, reflecting modest rental growth, while total net property income decreased 2 per cent to $537.2 million due to the sale of a 50 per cent interest in the Myer Centre Brisbane in March, 2012. For new leases, the rents were down about 7.5 per cent, but were steady for lease renewals, leading to a negative 1.1 per cent releasing spread, with the same expected this year.
Chief executive of the fund Michael Gorman said the Emporium project in Melbourne was 90 per cent leased and on track to open by the end of March 2014.
He declined to comment on the CBA internalisation, which analysts said could prompt the trust's largest shareholder, John Gandel - who owns half of Chadstone - to make an offer. "It's not appropriate for me to make any comments on the internalisation, except that it's business as usual for us.
"Specialty sales growth was slightly below our forecast of 3 per cent, but we're pleased with the steady improvement this year in what continues to a very challenging retail environment."
Mr Gorman said there had been a remixing of tenants in the portfolio, with fashion making way for technology and retail services.
"If anything, the sentiment among our retailers is slightly better than it was 12 months ago."
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CFS Retail Fund reported a 27.9% fall in net profit to $295 million. The decline reflected tough market conditions for discretionary retail and one-off property revaluations reported in the year.
The trust trimmed the proposed Chadstone Shopping Centre expansion by about 5,000 square metres to 20,000 square metres to "de-risk" the project amid a weaker market for apparel and discretionary items.
Before one-off items, distributable income rose about 3.5% to $384.6 million, in line with analysts' measures. The fund reported a full-year distribution of 13.6 cents per security (up 3.8%) and forecast a payout of 13.3–13.7 cents per security for the coming year, depending on asset sales of up to $500 million.
The sale of four Victorian centres that were earmarked for the proposed Pacific Retail REIT has been put on hold until market conditions improve.
Like-for-like net property income from tenants rose about 2%, but total net property income fell 2% to $537.2 million largely due to the sale of a 50% interest in the Myer Centre Brisbane. New-lease rents were down about 7.5% while lease renewals were steady, producing a negative releasing spread of about -1.1%, with a similar outcome expected this year.
CFS Retail Fund's Emporium project in Melbourne was reported as 90% leased and on track to open by the end of March 2014.
The fund's CEO declined to comment on the Commonwealth Bank internalisation. Analysts suggested the internalisation could prompt the trust's largest shareholder, John Gandel (who owns half of Chadstone), to consider making an offer, though no such action was confirmed in the article.
Management said the portfolio has been 'remixed' with fashion giving way to technology and retail services. Specialty sales growth was slightly below the 3% forecast but showing steady improvement, and retailer sentiment was reported as slightly better than 12 months earlier—signals investors can watch when assessing retail asset resilience.
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