07/08/2008 - 15:03

Property slump hits Bunnings trust

07/08/2008 - 15:03

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Market volatility is likely to impact Bunnings Warehouse Property Trust's earnings in the 2009 financial year as it reported a $39.3 million fall in the fair value of investment property portfolio, in contrast to a $167.9 million rise the previous year.

Property slump hits Bunnings trust

Market volatility is likely to impact Bunnings Warehouse Property Trust's earnings in the 2009 financial year as it reported a $39.3 million fall in the fair value of investment property portfolio, in contrast to a $167.9 million rise the previous year.

The fair value losses virtually wiped out the trust's net profit for 2007-08, with a reported 99.7 per cent drop in net profit to $692,000, though distributions remained roughly the same.

The losses, based on properety valuations conducted at least every three years, also netted off against more than $50 million in capital expenditure, leaving the met value of the property portfolio $12.1 million higher for the year at $962.3 million.

Most of the trust's properties worth valued at less than they were last year, revealing the extent of slump in property which has been hit by the failure of several big retail and commercial property developer/fund managers.

"As a result of the net revaluation loss, the underlying net tangible asset backing of the Trust's units decreased from $2.24 per unit at 30 June 2007 to $2.12 per unit at 30 June 2008," Bunnings said.

Total income for the financial year was up 10.3 per cent from the previous year to $65.9 million due to additional income received from new properties, property upgrades and annual rent reviews.

Distributable profit for the year was up from $39.1 million to $40 million.

"At this point we expect that volatile economic and market conditions during 2008/09, while generally creating an uncertain outlook, may provide the Trust with some growth opportunities," the company said.

"Volatility relating to interest rates and increased bank fees and margins may affect earnings."

At the end of the financial year, Bunnings held $6.62 million in cash, up from $5.1 million from the previous year.

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