Macquarie Countrywide Portfolio Performance Update


• Average portfolio occupancy level maintained at a solid 96.9%
• Rental rate growth continued to post healthy increases, in the US at 9.7%, in Australia 23.2%, and in Poland 15.6%.
• Average rental rate growth of 11.6% across 2% of the global portfolio leased during the period
• 225 leasing deals (71 new leases and 154 renewals), covering over 50,000 sqm of lettable area
• Successful first stage opening of two shopping centre re-developments in NSW

Chief Executive Officer, Steven Sewell said: “Rental growth achieved this quarter can be attributed to rental increases on new leases and reversions coupled with our active asset management of the portfolio. Notably, the Trust’s portfolio remains well leased to market dominant, non-discretionary spend anchors, such as grocers, supported by quality small shop retailers. These strong underlying fundamentals enhance the Trust’s resilience in times of a slowing economic environment particularly in the US.”

Australian/New Zealand portfolio

The Australian and New Zealand portfolio continued to deliver strong results during the quarter with occupancy levels remaining above 99% and rental growth of 31% on 20 new lease deals and 14.8% on 15 lease renewal transactions across the portfolio. Same store Net Operating Income (NOI) growth in Australia for the period to 31 March 2008 was 3.2%.

The first stage of the Morisset Square redevelopment in Morisset, NSW, opened for trade on 1 May, with 92.3% of the lettable area occupied and featuring a brand new 3,800 sqm Coles supermarket. The positive shopper response to the new premises has resulted in many retailers recording strong sales.  This was closely followed by the 9 May stage one opening of the refurbished mall at Orange Central in Orange, central NSW. The enhanced retail space is well leased with more than 96.4% of available lettable area occupied by tenants including national retailers such as Ed Harry Menswear and Payless Shoes.

US Portfolio

The Trust achieved 9.7% weighted average rental growth, driven by 34 new leases and 129 renewal transactions completed by the Trust’s Joint Venture partner, Regency Centers. During the quarter over 501,000 square feet of retail space was leased across the US portfolio.

Leases negotiated during the March 2008 quarter included one anchor and five secondary anchor leases with retailers such as Kroger, CVS, and Ross Dress for Less, at an average rental growth rate of 16.8% and lease terms averaging 9.1 years.

The portfolio occupancy at 95.8% was marginally down from 96.2% at 31 December 2007 due to the expiration of primarily short term leases with non-national brand retailers and the longer lead time spent securing alternative tenants. Same store NOI growth for the period to 31 March 2008 was 3.2%.

Mr Sewell noted: “Our key priorities are tenant retention and maintenance of occupancy levels to secure income streams in the current environment. Of the leasing deals completed during the period, 33 were with national brands featured in the ‘Preferred Customer Initiative’ (or PCI) program undertaken by Regency Centers, which is focused on attracting the best credit-rated tenants – such as Subway (four stores) and The UPS Store (four stores).”

Major homewares retailer Linens ‘n Things recently announced it had filed for voluntary petition under Chapter 11 to Complete Financial Restructuring. MCW has only one tenancy leased to this retailer, which has not been listed as targeted for closure and given its prime location in the Weslayan Plaza centre in Houston, Texas, management does not foresee any income risk at this property.

Europe portfolio

Since the Trust’s entry into the European market in 2007, the portfolio has continued its solid performance and maintained an occupancy level of over 99% during the March 2008 quarter.

Of note was the leasing demand from retailers seeking to locate within the Poland portfolio of five shopping centres. During the period, 12 new leases with rental growth of 24% and 11 renewals with growth of 7.3% were finalised.


“These results highlight the Trust’s track record of attracting and retaining a diverse range of retailers. While management continues to execute its objective to reduce debt through selective asset sales, it remains focused on generating income streams and maintaining occupancy levels with the aim of enhancing the Trust’s long term performance,” added Mr Sewell.

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Marc Pallisco

A former property analyst and print journalist, Marc is the publisher of