Thinking Inside the Square

Tuesday 04 March 2014

Office: with the exception of CPA, office portfolios reported a softening in LFL NOI growth. Occupancy levels were topical this reporting season in determining how the mix of retention levels, expiry levels & downtimes worked into the reported occupancy. Each of the office AREITs reported softer occupancy levels versus pcp.

Retail: Sales (MAT) results were mixed across the key categories although the consistent theme was non-discretionary categories outperforming at both the major and specialty levels. The discretionary retail metrics this reporting season through the lens of specialty re-leasing spreads saw a further deterioration in most of the key metrics (renewals/replacement) spreads.

Industrial: The industrial portfolio results saw quite a divergence in portfolio metrics with occupancy levels ranging from 89.7% (SGP) to 99.5% (MGR) and equally LFL ranged from MGR (5.2%) to DXS (0.6%). The appeal of having relatively high yielding industrial assets in a portfolio has been somewhat diminished in the operating metrics reported in some cases that has seen occupancy circa 95% yet LFL seldom not exceeding CPI.

Source: National Australia Bank

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