This issue’s featured property: 447 Collins Street, Melbourne.
Highlights
- The Fund’s rent collections remain stable with 88% of March 2021 billings collected from 100% owned properties.
- On aggregate, independent valuations for Q1 2021 increased with a total direct property portfolio (excluding unit trust interests) value of $15.24B. This reflected an increase of $24.63M (after development and capital expenditure) from the valuations recorded in Q4 2020.
Key drivers of valuation
- Commercial: Decreased by $3.38M (after capital expenditure) primarily due to a softening leasing market where incentives and downtimes have increased, increased capital expenditure attributed to the inclusion of refurbishment projects and a reduction to 10-year CAGR.
- Retail: Decreased by $57.93M (after capital expenditure) primarily due to lower assessed market rental levels, increased vacancies, softer growth assumptions, application of stabilisation allowances and increased major tenant capital upgrade allowances at lease expiry within Westfield Doncaster and the CBD retail assets as a result of COVID-19 drop in visitation.
- Logistics & warehousing: Increased by $61.86M (after capital expenditure) primarily due to widespread capitalisation rate and terminal yield firming of 25 to 50 bps, increased growth assumptions and an increase in land value.
- Education: New Valuer. Portfolio increased by $20.49M (after capital expenditure) primarily due to the increase to the Victoria University Tower valuation, attributed to the capitalisation rate and terminal yield firming and release of a portion of the profit and risk allowance.
Latest office occupancy survey by the Property Council of Australia shows increasing workers returning to CBD offices, with Melbourne experiencing the highest increase over the past month.
Unlisted property assets are a source of stability and great long-term returns for REI Super’s portfolio.
Approximately 61% of REI Super’s property portfolio within Balanced is invested in unlisted property assets, through one of our long-standing investment managers, Industry Super Property Trust (ISPT).
Unlisted property assets are assets that are not listed on the Australian stock exchange and are generally not readily available to individual investors.
Unlisted property investments are excellent long-term investments, providing a combination of growth and income to REI Super’s portfolio. They also have fewer short-term ups and downs in their returns than many investments.
REI Super’s investments in ISPT are through its Core Fund, which is a diverse portfolio of around 75 Australian commercial, industrial and retail properties across capital cities and regional centres.
Since inception in 1994 the ISPT Core Fund has achieved a total gross return as at 31 March 2021 of 9.45% p.a.
The portfolio includes many iconic Australian properties:
- Melbourne’s GPO
- Westfield’s Doncaster Shopping Centre, Melbourne
- Brisbane’s Wintergarden complex
- Casselden Place, Melbourne
- Liberty Place in Castlereagh Street, Sydney
- 2 National Circuit, Canberra
- 100 St Georges Terrace, Perth
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Future investment performance can vary from past performance, and you should not base your decision to invest in REI Super simply on past performance. Past earning rates are not an indicator of future earning rates. The investment returns of REI Super are not guaranteed, and the value of the investment may rise or fall.
The information contained in this article does not constitute financial product advice. However, to the extent that the information may be considered to be general financial product advice, REI Super advises that REI Super has not considered any individual person’s objectives, financial situation or particular needs. Individuals need to consider whether the advice is appropriate in light of their goals, objectives and current situation.
REI Superannuation Fund Pty Ltd ABN 68 056 044 770 AFSL 240569. RSE L 0000314 REI Super ABN 76 641 658 449 RSE R1000412 MySuper unique identifier 76641658449129. April 2021.