Covid-19 disruption slashes the value of Kiwi Property's portfolio by almost $300m

Monday, 20 April 2020

The new Galleria expansion at Sylvia Park is expected to open later this year.

Coronavirus Covid-19 disruption to retailing has cut the value of Kiwi Property's huge portfolio of commercial buildings by almost $300 million.

The company which owns big name shopping centres like Sylvia Park in Auckland and The Base in Hamilton said its portfolio had fallen in fair value by $290 million, 8.5 per cent, to $3.1 billion for the year ending March 30 2020 following an independent revaluation.

Chief executive Clive Mackenzie said the valuations had been heavily impacted by the Covid-19 pandemic.

While the shopping centres' values were worst hit, the value of some of Kiwi's large office building rose.

Kiwi Property chief executive Clive Mackenzie says Covid-19 has hurt the value of the company's property portfolio, particularly shopping centres.

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'The significant uncertainty caused by the coronavirus has prompted valuers to include an assessment of its effects on property values. As a result, their assumptions around rental growth, vacancy, downtime, leasing up allowances and trading conditions have all softened.

'This uncertain environment is likely to continue for some time. We will regularly review further changes in asset values and make additional announcements as appropriate,' Mackenzie said.

The Aurora Centre office building in Wellington has increased in value by 7 per cent, Kiwi Property says.

Its mixed-use portfolio, which includes Sylvia Park, Sylvia Park Lifestyle, LynnMall and The Base, declined 10.6 per cent, $177m, to $1.5b. It is 48 per cent of the total portfolio.

Its retail centres fell by $126m, 20.8 per cent, to $481m. Regional shopping centre values were hardest hit by the effects of Covid-19. The regional retail assets were continuing to decrease as a proportion of Kiwi overall holdings, comprising 15.5 per cent of the portfolio at March 31 2020.

Kiwi's office portfolio proved the most resilient increasing in value by $15m or 1.6 per cent to $910m, Mackenzie said.

In Wellington, The Aurora Centre and 44 The Terrace, delivered growth of 7.1 per cent and 7.4 per cent respectively, underpinned by long-term New Zealand Government leases.

In Auckland, ASB North Wharf increased in value by 3.1 per cent while Vero Centre decreased by 1.7 percent.

Kiwi holds a portfolio of other properties, outside of its investment-grade assets. They include Drury landholdings, as well as industrial redevelopment land around Sylvia Park. This portfolio recorded a $1 million, or 0.5 per cent, decrease in value to $215m.

In recent years, Kiwi Property had signalled its strategy of creating mixed-use assets. The 'other properties' portfolio held many of the assets that would enable that transformation, Mackenzie said.

'Mixed-use is critical to Kiwi Property's growth. With our significant landholdings at Sylvia Park and Drury, we are in a position to develop master-planned communities that contain a mix of asset classes, and are potentially more resilient in the face of market shocks, such as those caused by Covid-19.'

Following the valuation result, Kiwi's net tangible asset backing per share fell by 18 cents from $1.42 to $1.24 per share.