By David Winning
SYDNEY–New Zealand-based Kiwi Property on Monday signaled a 2.4% decline in the value of its real-estate portfolio for the six months through September.
The real-estate investment trust said an independent assessment has pointed a 77.1 million New Zealand dollars (US$46.0 million) decrease in the fair value of its portfolio.
Kiwi Property said strong rental growth across its assets had offset softening capitalization rates, helping to mitigate the reduction in property values. It expects the property portfolio to be worth NZ$3.1 billion at the end of the six-month period.
Commercial real estate is typically valued based on its capitalization rate, or the annual net income produced by a property divided by the purchase price. Like bond yields, falling cap rates indicate rising values, and vice versa.
“New Zealand’s high inflation, high interest rate environment has contributed to a widespread decline in property values over recent periods,” said Chief Executive Officer Clive Mackenzie. “While this is disappointing, we’ve continued to deliver an impressive operational performance, led by our mixed-use centres, such as Sylvia Park, LynnMall and The Base.”
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