Property giant GPT Group has joined Vicinity Centres in writing down the value of its shopping centres.
Vicinity cut the value of its centres by between $1.8 and $2.1 billion in a statement early last week with the final figure to be fixed at the end of the June financial year.
Yesterday, GPT joined Vicinity with more than half a billion dollars in preliminary cuts with the final figure to be released in August after a further revaluation on June 30.
GPT said that an independent valuation from December 31, 2019, to May 31, has resulted in an 8.8% fall in book values of its centres, or $476.7 million in value.
GPT owns or has a stake in seven shopping malls.
In addition to the direct investments in the malls, GPT has two funds – the GPT Wholesale Office Fund (“GWOF”) and the GPT Wholesale Shopping Centre Fund (“GWSCF”).
Both have been independently revalued as at 31 May 2020.
“GWOF recorded a negative revaluation of $34 million, representing a decline in book value of 0.4 percent against the 31 March 2020 book value.
“GWSCF recorded a negative revaluation of $137.6 million, representing a decline in book value of 3.5 percent against the 31 March 2020 book value,“ GPT said in yesterday’s announcement.
Despite this negative news, GPT securities price jumped more than 7% to $4.57.
GPT CEO Bob Johnston said the group has also withdrawn its earnings guidance.
“The retail asset revaluations reflect the independent valuers’ assessment of the effects that COVID-19 and the subsequent social restrictions have had on our retail assets.
“This has generally been reflected in lower market rental growth rates, increased vacancy, and abatement allowances and some softening in investment metrics,” Mr. Johnston said.
And GPT has changed the way it calculates (and announces) its distributions which look like producing smaller payouts to securityholders.
“GPT has previously declared its interim and final distributions prior to balance date. As a result of the uncertainty created by the effects of the COVID-19 pandemic and the application of the mandatory Code of Conduct, the Group is adjusting the timing of the declaration of its distributions to coincide with the release of the Group’s financial results in February and August each year,” the company explained in Monday’s announcement.
“In addition, the Group is amending its distribution payout policy to align with free cashflow. Under the amended payout policy, GPT will target to distribute 95 to 105 percent of Free Cashflow, defined as operating cash flow less maintenance and leasing capex and inventory movements.
“The Group’s previous policy was to distribute 95 to 105 percent of Adjusted Funds from Operations, defined as Funds From Operations less maintenance and leasing capex.
“The above changes will take effect commencing with the Group’s 2020 interim distribution. The timing of the distribution payment to securityholders is not expected to materially change from prior periods,” GPT said.