CPA reaffirms guidance
Commonwealth Property Office Fund (CPA) reaffirmed previous distribution guidance of 5.3c per unit for FY10, based on a continuation of existing economic conditions. The fund said it expects to see an improvement in tenant demand for office space across Australia due to the resilience of the Australian economy, which should benefit its largest geographic holding in Sydney.
Head of Property, Darren Steinberg, said usually an improvement in office space market fundamentals lags an economic recovery, but the continuing strength of the Australian economy is expected to see the recovery in fundamentals brought forward.
“CPA remains well positioned with a strong balance sheet to capitalise on opportunities that may arise in the current market,” Mr Steinberg said.
As at 30 September 2009, CPA said its portfolio occupancy was 98.5%, while its gearing level stood at 26%.
The fund also said it achieved an average rental increase of 3.9% for space subject to rental review during the September quarter.
CPA fund manager, Charles Moore, said Australian economic indicators continue to demonstrate favourable improvement in the domestic market, which he said would have a direct flow-on effect to expected demand for office space as business confidence returns and tenant enquiry and tenant activity increases.
“This has resulted in a downward adjustment to our assumptions for peak vacancy levels,” M Moore said.
During the quarter CPA conducted rent reviews, which produced an average rental increase of 3.9% over the previous passing rentals for the reviewed space.
In addition the fund said 12 of its 25 office assets were independently revalued, resulting in a 4% or $45.5 million decline on prior book value.
As a result of these revaluations, it is estimated that the Fund’s Net Tangible Asset backing (NTA) per unit declined from $1.15 at 30 June 2009 to $1.13 at 30 September 2009,” CPA said.
“The portfolio weighted average capitalisation rate softened marginally from 7.7% at 30 June 2009 to 7.8% at 30 September 2009.”
As at 1050 AEDT, Commonwealth Property Office Fund shares were up 1c to 95c.
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