Kiwi Property says it's seen an “expected” 5.8% decrease in the fair value of its property portfolio in the past six months due to high inflation and uncertain interest rates.
The property company released the draft valuations of its portfolios as at Sept 30, with its mixed-use, office, retail and other properties set to be worth $3.4 billion at the close of the period – down $212.5 million from March 31.
Chief executive officer Clive Mackenzie said the high inflation and interest-rate environment led to capitalisation rates “softening” across the property sector globally.
The New Zealand market had been “particularly impacted” over the past few months, he added.
Kiwi Property’s mixed-use portfolio fell 4.7%, or $93.3m, and its office portfolio dropped 5.8%, or $60.2m.
The company’s ‘other properties’ portfolio posted the biggest decline, down 12.4%, or $35m, while properties held for sale fell 11.1%, or $24m.
However, Mackenzie said Kiwi Property’s investment portfolio continued to perform well and was experiencing increased occupancy driving robust rental income growth.
However, the operating performance wasn't enough to offset the “volatile macro-climate”.
“While the reduction in the fair value of our property portfolio is disappointing, it is not unexpected given the headwinds facing the global economy,” he told the New Zealand stock exchange (NZX).
“By actively managing our assets and tightly managing costs, we will help accelerate the resurgence of our asset values as the financial climate improves.”
Kiwi Property said neither the company’s operating earnings nor its cash dividend will be affected by the draft valuation movement. Its cash dividend guidance remains at 5.7 cents per share.
The company's shares fell 1.1% to 90.5 cents in mid-afternoon trading.
