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AUSTRALAND, a subsidiary of Singapore's largest listed developer CapitaLand, yesterday announced a A$235 million (S$275 million) revaluation loss following a full revaluation of its investment property portfolio.
The Australian unit also said that it will write down its development assets by about A$134 million following a review of its inventory carrying values.
CapitaLand has a stake of 59.27 per cent in Australand and consolidates Australand's operations in its group financial results. Australand's revaluations losses will therefore be reflected in CapitaLand's second-quarter results.
In its statement, Australand said that the average market capitalisation rate for its investment portfolio rose by 85 basis points to 8.3 per cent since end-2008.
As a result, the company's investment portfolio as at June 30, 2009, is likely to see a A$235 million fall in value - or a drop of about 10 per cent since end-2008.
Australand also did a review of its residential, commercial and industrial development inventory.
As a result of the further deterioration in the residential property market and the deferral of a number of projects, an impairment of about A$76 million (before tax) will be taken against the value of wholly owned and joint venture residential assets, the company said.
And with the softening in capitalisation rates for new commercial and industrial projects, the group's commercial and industrial development inventory will be impaired by about A$58 million (before tax) as at June 30, 2009.
This impairment also reflects the deferral of a number of projects, Australand said.
Australand's financial results for its half year ended June 30, 2009, are scheduled to be released on July 27 and further detail will provided then.
CapitaLand, on its part, will release its Q2 and half year results on July 30. The group will include revaluation gains and/or losses from subsidiaries such as Australand and The Ascott Group in its consolidated financial results.
Analysts, including those from Credit Suisse, have said that they expect CapitaLand's commercial and hospitality businesses as well as Australand to dampen overall earnings.
However, when it comes to its listed real estate investment trusts (Reits) such as CapitaMall Trust and CapitaCommercial Trust (CCT) - where CapitaLand holds stakes of less than 50 per cent in both - the company uses equity accounting.
This means that the 10.15 per cent loss in the value of CCT's property portfolio, which the office trust announced in May, will not be wholly reflected in CapitaLand's Q2 earnings.
CapitaLand gained 8 Singapore cents, or 2.1 per cent, to close at S$3.81 yesterday.
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