KEY POINTS:
Investors in listed landlord National Property Trust heard this week how the retail downturn could blight their future.
In the interim report for the half-year to September, Kevin Podmore, chairman of National, said less shopping could cause challenges.
The trust, which has property valued at $290 million, owns Newmarket's Rialto shopping centre, the Eastgate shopping centre in Christchurch, Napier's Ocean Boulevard shopping centre, the Goddards retail centre in Tauranga and other commercial properties.
Less retail spending is not National's only issue.
The trust's manager is also owned by Wellington's troubled St Laurence group, which owes $234 million to about 9000 investors.
Podmore flagged the idea of buildings without tenants, particularly because the trust had a high level of exposure to the retail sector.
"The economic downturn has impacted on the demand for goods and services which may increase the risk of tenants vacating and the ability to negotiate higher rentals. This risk has been mitigated, to a certain extent, by the diversified nature of the trust's portfolio and its tenant mix, despite the skew towards the retail sector," Podmore said.
"The trust is looking at several strategic options and will provide an update on the outcome of the review ... early in 2009," Podmore said.
The trust made a net loss after tax and asset revaluations of $9.3 million in the half-year. Podmore blamed an unrealised 4.5 per cent or $13.77 million decrease in property valuations.
Net rental income dropped by $540,000 compared to the previous period, reflecting the sale of CSI Logical House in January.
An unrealised loss in interest rate swaps of $3.6 million occurred, due to the rapid decrease in swap interest rates as a result of the economic downturn. As a result of the loss, total unitholder's funds decreased to $177.72 million, down from $188.55 million at November 30 last year. Total assets now stand at $290.64 million, down from $317.62 million.
This has reduced the net tangible asset backing to 92.97 cents per unit compared to $1 a unit at the end of March.
