NPT Limited Announces Valuation Updates as at 31 March 2011
NPT Limited (NPT, the 'Company'), the Manager of The National Property Trust (the 'Trust'), today announced that the Trust's property valuations for the financial year ended 31 March 2011, as determined by independent valuers, have been received. This is the final financial period for which the Trust operated. As from 1 April 2011 NPT Limited became the Manager of the Trust and is releasing these valuations in that capacity.
The updated valuations saw NPT's property portfolio values reduce by 10.87 per cent, a reduction of $20.56 million, in the six months since September 2010. This brings the total reduction for the full financial year to 11.21 per cent, or $21.30 million, resulting in the Company's portfolio being valued at $168.64 million at financial year end.
The value of Eastgate Shopping Centre has reduced by $18.6 million or 25.27 per cent since 30 September 2010, to $55 million. The Eastgate Shopping Centre was damaged in the 22 February 2011 Canterbury earthquake. In particular the area comprising some specialty stores and the raised car park was materially damaged. This area has subsequently been demolished and progress is being made on its reconstruction. The work is covered by replacement insurance with NPT carrying only 2.50 per cent of the overall cost of the reconstruction. Insurance also covers loss of rental income for a period of up to 24 months.
NPT Limited's Chairman, Sir John Anderson said, "The reduction in the value of the portfolio is almost entirely attributable to the impact of the Christchurch earthquakes. Our independent valuers have noted the uncertainty in respect to the Christchurch property market following these earthquakes, and have consequently increased the capitalisation rates when assessing Eastgate, Natcoll House and Print Place. Only 0.54 per cent of the decrease in the portfolio's value over the last six months has come from properties outside Christchurch.
"Importantly, the reinstatement of the Eastgate Shopping Centre to its pre-earthquake condition, will improve the valuation" said Sir John.
The value of Natcoll House, located within the Christchurch CBD, has reduced by $1.18 million or 8.93 per cent since September 2010, to $12.03 million. The property has been initially assessed and "green stickered" but remains cordoned off inside the CBD red zone. Once access is restored the Company will be able to undertake a comprehensive assessment of the property. NPT expects that there will be demand for space once the CBD is back in operation and has already received several enquiries from prospective tenants.
NPT Chairman, Sir John Anderson said, "On a positive note, despite the commercial property market remaining flat we have seen valuation increases at the AA Centre in Auckland and at the Ocean Boulevard retail centre in Napier."
The Bank of New Zealand, which provides NPT's funding facility, has granted the Company waivers over specific covenants effected by the Christchurch earthquakes, to take account of the material impact on the valuations of NPT's Christchurch properties. As at 31 March 2011 NPT met all its banking covenants, with the loss of rental income being covered by insurance. The waivers are in place for an initial period of six months to 30 September 2011 when they will be reviewed.
The full independent valuations are still subject to final audit and will be confirmed when NPT releases its end of year results.
Update on Eastgate Shopping Centre Repairs
As previously advised Kerry Hitchcock is acting as the Chief Executive Officer and one of his major focuses is overseeing the rebuilding and re-opening of the Eastgate Shopping Centre.
Significant progress continues to be made on repairs to the Eastgate Centre and businesses are being reopened in stages. Stage one is complete with MaxOut, Subway, NZ Post, Silky Smooth Hair Design and Westpac already open for business. Stage two will see Countdown trading by 8 June and many of the specialty stores, all the foodcourt operators and The Warehouse reopening on about 14 June.
The demolition of the raised car park has been completed and the car park resealing is scheduled to be completed by 20 May. The rebuild will commence as soon as council consents and building contracts are in place.
Acting Chief Executive Officer, Kerry Hitchcock said "We are very pleased with progress at the Centre. Many shops in Eastgate's vicinity were destroyed in the earthquake and we are looking forward to providing our local customers with easier access to essential supplies."
New Lease at Heinz Wattie's Property
NPT has also announced today that a new nine year lease has been agreed with Heinz Wattie's at their warehouse in Hastings increasing the Weighted Average Lease Term at the property to 8.91 years. This will take the portfolio's Weighted Average Lease Term to 3.85 years, up from 3.09 as at 30 September 2010.
As part of securing this significant lease extension the Company has agreed to invest in building a substantial extension to the property. An independent valuer has assessed that there will be a tangible increase in the property's value with the new lease in place.