CFS shops around for right retail mix

CFS retail property trust will look to get the right mix of tenants in its DFO stores portfolio after posting a “solid” result for the 12 months to the end of June. 

The group reported profits of $532 million with net property income on its 29 retail properties up 13%. The assets have a total valued at $8.5 billion. More than three-quarters of its portfolio is made up of super-regional and regional shopping centres. 

The trust acquired four DFO retail outlets during the financial year in Moorabbin, Essendon, South Wharf and HOMEBUSH in Sydney at just under $500 million. 

Trust funder manager Peter Gorman says the focus during the forthcoming financial year will be on enhancing tenancy relationships, filling vacancies and getting the tenancy mix right. 

“More experienced managers who get their retail mix, marketing and customer proposition right, will be the winners in this cycle,” Gorman says.

Gorman expects challenging retail sales conditions to continue in the first half of the financial year driven by consumer caution, but that this will ease in the second half of the year with sales growth to start to improve as consumers increase spending 

The trust anticipates retail sales growth of 3% for the 2012 financial year. 

Commenting on the annual results managing director of property at Colonial First State Darren Steinberg says there remains demand for quality Australian shopping centres from offshore investors. 

He says the retail market has shown signs of recovery “reflected in firming investment metrics such as capitalisation rates”. 

CFS is currently developing Emporium Melbourne in the CBD at a cost of $1.12 billion. It is targeting an initial one year yield of greater than 6%. The project is expected to begin trading in 2013.

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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