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Shopping Centres shares fall lower despite valuation increase

Shopping Centres Australasia Property Group Re Ltd (ASX: SCP) shares slumped lower yesterday after a dividend distribution update from the group.

What did the group announce yesterday?

Shopping Centres shares were under pressure after yesterday’s dividend distribution announcement. 

The Aussie real estate investment trust (A-REIT) announced a 7.50 cents per stapled unit for the period from 1 July to 31 December 2019.

That represents a 3.4% increase on the prior corresponding period in 2018. The payment date for Shopping Centres shareholders is 29 January 2020. That is set to be just days before the group’s half-year results release on 4 February.

The group intends to run a dividend reinvestment plan (DRP), which is underwritten by Moelis Australia. 

Shopping Centres shares fell lower after the dividend announcement as well as its December 2019 property valuations update.

The group reported an increase of $85.7 million from June 2019 to December 2019. That brings the total portfolio value to $3,232.8 million to end the year, up from $3,147.0 million in June.

Shopping Centres shares fell lower despite a $22.2 million increase in like-for-like properties. The group’s $83.2 million acquisitions and $19.6 million of disposals throughout the period also contributed to the numbers.

The group’s valuation weighted average capitalisation rate edged 2 basis points lower to 6.46% in December 2019.

How have Shopping Centres shares performed this year?

Shopping Centres shares have done well in 2019 and the A-REIT now has a $2.5 billion market cap.

The group’s share price is up 5.85% since the start of January, which isn’t bad for a REIT. The structure of REITs means that capital gains are rare due to their high payout ratios.

Shopping Centres is currently yielding a tidy 5.49% despite the recent troubles in the retail sector.

However, there have been a few exceptions to the “no capital gains” rule for REITs. Stockland Corporation Ltd (ASX: SGP) shares are up 40.29% this year while Mirvac Group (ASX: MGR) has rocketed 49.09% to $3.28 per share.

Foolish takeaway

It’s worth keeping an eye on Shopping Centres shares today following the revaluation and distribution update.

While the group edged lower yesterday, it was a bad day for the S&P/ASX 200 Index (INDEXASX: XJO) overall, so we could see some more moves today.

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Motley Fool contributor Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Shopping Centres Australasia Property Group. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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