The Vicinity Centres (ASX: VCX) share price is in the green this morning after the company announced its preliminary asset valuations have come in $309 million higher.
The unaudited boost represents a 7 cent per share increase to the company’s book values as of 31 December 2021.
At the time of writing, the Vicinity Centres share price is $1.76, 1.73% higher than its previous closing price.
Let’s take a closer look at today’s news from the shopping centre-focused real estate investment trust (REIT).
Vicinity Centres share price takes off on higher valuations
The increase in the company share price has likely thrilled many shareholders. Particularly, as the company’s valuations tumbled $181 million over the second half of financial year 2021.
That represented a 1.3% fall, driven by Victorian land tax and stamp duty increases, as well as COVID-19 impacts.
Today, the company announced that its assets’ values have seemingly been fortified by a strong capital transaction market and resilient underlying retail sector.
The $309 million preliminary increase represents a 2.2% uplift in book values. It also heralds a 13 basis point tightening of the weighted average capitalisation rate to 5.35%.
The valuations are still subject to finalisation and external auditor review. Any increase will be confirmed when the company releases its results for the first half of financial year 2022 in February.
Vicinity Centres CEO and managing director, Grant Kelley commented on the news driving the company’s share price today, saying:
DFO valuations continue to grow as tightening capitalisation rates and income growth highlight the strength of our DFO portfolio … Vicinity is the market leader in the Outlet category…
Pleasingly, our CBD portfolio recorded a modest uplift in valuations over the period, supporting our view that the outlook for CBD retail is improving and these centres will return to their former vibrancy over time.