Retail landlord Vicinity has reported a valuation gain of $408 million for its network portfolio with its Chadstone Shopping Centre investment in Melbourne providing a major boost.

Vicinity said 42 of its 74 directly-owned retail properties (56 per cent by value) have been independently valued and the remaining properties have been subject to internal valuations resulting in a net valuation gain for the overall portfolio of $408 million, a 2.6 per cent increase for the six month period. The December valuations are subject to a final audit and will be confirmed in Vicinity’s FY18 interim results to be announced in February.

Grant Kelley, Vicinity CEO and managing director, said was buoyed by the result, in particular the net $324.1 million or 12.1 per cent uplift in the landlord’s investment in Chadstone Shopping Centre.

Chadstone was independently valued in the period and is now valued at $6.0 billion (Vicinity share: $3.0 billion), with the capitalisation rate firming from 4.25 per cent to 3.75 per cent.

“Chadstone continues to trade strongly following completion of the $666 million (Vicinity share: $333 million) major development in June 2017,” said Kelley.

“Our DFO centres also contributed to our portfolio valuation gain in the half, driven by strong income growth and capitalisation rate compression, particularly at Homebush (up $41.1 million or 9.7 per cent) and South Wharf (up $42.5 million or 7.1 per cent).”

Box Hill South reported a gain of $15.5 million or 8.0 per cent supported by “solid trading performance” and capitalisation rate compression.

Roselands and Galleria recorded net valuation declines in the period of $19.6 million (down 10.8 per cent) and $16.4 million (down 4.1 per cent) respectively for Vicinity’s 50 per cent share in each asset.

“Plans for a refurbishment at Roselands and a major redevelopment of Galleria continue to progress well,” said Kelley.

At 31 December 2017, net tangible assets per security (NTA) is estimated to be $2.93 which is up 11 cents, or 3.9 per cent, compared to $2.82 reported at 30 June 2017.

Gearing is estimated to be 26.6 per cent as at 31 December 2017, up from 24.7 per cent at 30 June 2017, with Vicinity attributing the rise during the half to development capital expenditure incurred and its on-market security buy-back program, partly offset by valuation gains.

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