ASX-listed Growthpoint Properties Australia’s office portfolio value fell about 6% during the second half of 2022, down by $146.9 million compared to its mid-2022 book values. 

In contrast, the company said the value of its industrial portfolio increased by 0.4%, or $3.3 million, on a like-for-like basis during the same period. 

The company said on a like-for-like basis, the average market capitalisation rates of the industrial properties valued had increased about 18 basis points to 4.9%.   

The company saw a 4.3% decline in the value of more than half of its office and industrial assets during the second half of last year.  

The group had 35 of its 59 directly owned properties valued, with preliminary draft valuations indicating a $143.6 million decrease in asset values. 

Growthpoint Managing Director Timothy Collyer said the group’s movement in preliminary draft external valuations reflected the increased cost of capital and demand for higher return hurdle rates from investors in commercial property markets.  

“Pleasingly, conditions within the office and industrial occupier markets remain generally positive,” Collyer said.  

“In the industrial market there is strong rent growth which is largely offsetting yield expansion. Office markets continue to see positive net absorption and increasing physical occupancy, with companies recognising the importance and quality of their office spaces to support collaboration and new ways of working.”  

The group had 15 of its 31 industrial assets and 20 of its 28 office assets revalued at the end of last year.   

The revaluations were expected to cut the group’s net tangible assets by about 19 cents per security (cps). 

Meanwhile, the group upgraded its 2023 financial Year funds from operations guidance to 25.5 to 26.5 cps, previously 25.0 to 26.0 cps, reflecting positive leasing activity and increased visibility of interest costs for the group. 

“Growthpoint remains well positioned to continue to manage through the current period of macroeconomic volatility with higher inflation, central bank rate rises and higher interest costs,” Collyer said.  

“The group’s exposure to favoured industrial and metropolitan office property markets and secure income from predominantly large corporate and government tenants continues to provide a resilient foundation to our business.” 

The company said the remaining valuations would be released in February.