CFS Retail Property Trust reports damage

The Colonial First State (CFS) Retail Property Trust has reflected the extent of the damage in the listed property market in its latest results.

The net profit of the CFS Retail Property Trust took a 39.9 per cent hit over the 12 months to June 30, 2008, reporting net profit of $669.1 million, down from the previous year’s $1,112.9 million.

According to CFS, this result was due in part to “the difference in the net gain from property revaluations over the two periods”.

Over the 12 months to June 30, 2008, the trust delivered unit holders a total return of -9.1 per cent. This represents outperformance when compared to the relevant benchmarks: the UBS Retail 200 Accumulation Index returned —32.1 per cent, while the S&P/ASX 200 Property Accumulation Index returned -36.3 per cent over the same period.

According to CFS Property Management head of listed property Darren Steinberg, despite the fact that the CFS trust has the highest credit rating in the Australian real estate investment trust sector, it too has suffered the rising cost of capital and debt financing.

CFS said it is clear that the period of compression of capitalisation and discount rates across all types of real estate assets over recent years has now ended, and that capitalisation and discount rates will soften.

“Lack of transaction activity means that independent valuers have not had strong evidence to change valuation metrics to date, but more transactions are likely to occur over the next 12 to 18 months,” a statement from CFS said.