Portfolio and valuation
The value of the Spanish retail portfolio reduced from € 546.7 million at year-end 2007 to € 482.1 million at the end of 2008. Investments in the portfolio and the pipeline totalled € 1.7 million, mainly in Maremagnum in Barcelona. As there were no further movements in the portfolio during the year under review, the rest of the fall in value was due to negative revaluations, which produced a negative result of € 66.3 million, a fall of 12.1% (2007: +4.3%) compared with the book value at year-end 2008 before revaluation. This fall in value was primarily due to higher yield requirements in the light of the financial crisis and the weak economic climate in Spain, which pushed up the initial yields demanded by investors by around 100-125 basis points. Although there were fewer transactions in 2008, it is generally thought that the net initial yields at year-end 2008 varied between around 6.0% and 6.25% for first-class shopping centres, and 8% for secondary centres. Rents rose at all Corio’s shopping centres in Spain. Only the income from the car park at the Maremagnum shopping centre was under pressure in the fourth quarter, mainly because of reduced accessibility owing to roadworks. The smallest value write-downs were at dominant inner-city shopping centres such as Maremagnum in Barcelona and Gran Via de Hortaleza in Madrid. In addition to the generally higher yield requirements, the reduction in value of Maremagnum can be explained by lower parking income in the fourth quarter of 2008. However, the biggest relative value write-downs were seen at the centres where there are plans for redevelopment and extension, namely La Loma in Jaén and El Ferial in Parla. Despite the positive trend in rents at La Loma, there was a reduction in the value of the future extension, which was included in the valuation in both 2007 and 2008, reflecting the higher risk premium for development projects. The net theoretical initial yields of the Corio portfolio rose by around 100 basis points, from 5.5% at year-end 2007 to 6.5% a year-end 2008.
Source: Annual Report 2008, Chapter Review of operations, page 100 (PDF, 2,1 MB)
Add to My report