Ale Property Group (ASX:LEP) announced this morning that it had formally and independently reassessed the valuation of its property portfolio consisting of 86 properties throughout Australia. As at 30 June 2015 the total valuation comes to $900.47million, representing a half year increase of $62.58million and a full year increase of $78.70million or 9.59 per cent.
The carrying value of 38 properties were independently valued by CBRE. Ale’s weighted average capitalisation rate reduced from 6.42 percent to 5.99 per cent. This was based on the tightening of capitalisation rates across the broader property investment market, as continually low interest rates have increased competitive pressure for commercial property investments.
With advice from CBRE, the Directors valuation of the remaining 48 properties (also independently valued over the previous two years) applied the same percentage movement in the weighted average capitalisation rates, on a like for like basis, as applied to the 38 properties independently valued by CBRE as at 30 June 2015. In addition to tighter capitalisation rates, valuations were also boosted by annual CPI rent increases.
All valuations of individual properties were excluding premiums or discounts potentially obtained from a portfolio based valuation, resulting in more accurate valuation of each property’s unique circumstances.
Ale’s property portfolio is spread throughout Australia. When looking at a state by state analysis of the change in its property values over the last 12 months, all states experienced increased valuations with the exception of South Australia, dropping by 3.32 per cent. The best performer was Queensland, gaining 14.4 per cent.
Over the last 4 years Ale’s share price has experienced healthy and steady growth. Spurred on by consistent financial performance and large dividends, investors have remained positive about the company. Today’s announcement of the increase in its total property portfolio has been seen as positive, however has only resulted in a share price gain of approximately 0.55 per cent.
Author: Ben Visser
Jul 17, 2015
Ben is a Wise-owl equity analyst focusing on ASX blue-chips stocks. Ben has a Bachelor of Business in Finance majoring in property valuations and management. In his role at Wise-owl Ben conducts in-depth fundamental and technical analysis which helps him to find profitable investment opportunities on the ASX and abroad.