Macquarie fund gets $US75 million boost

The Macquarie Office Trust has received a $US75 million increase in the value of its assets after an independent revaluation of seven US properties in the portfolio.

The average appreciation level of the seven properties was 8 per cent and the process has meant the trust’s net tangible assets have risen by five cents.

The US property result follows a recent revaluation of the trust’s Australian assets that added $A189.3 million to the portfolio’s value, where the average upward movement of each property assessed was 24 per cent.

In total the trust’s portfolio value has experienced a lift of $283.8 million in the six months to December 31, 2006.

“The increase is considered high and this is a very strong result. You wouldn’t expect it to occur every six months or 12 months at that level,” Macquarie Office Trust chief executive Adrian Taylor said.

He believes the strength of the US result is a reflection of Macquarie’s decision to re-weight the portfolio toward properties in Southern California.

“We love Southern California because it has a huge employment base and very strong economic activity. Its employment and GDP growth have generally tended to be stronger than most parts of the US,” he said.

“It also has generally lower vacancy rates…and also it’s very difficult to build in Southern California. The one thing that can take the wind out of the sail of an office market is when too much supply comes onto the market and there isn’t enough demand to absorb it, Taylor added.

In regard to the Australian revaluation outcome he attributes the increase to several different factors.

“The range of factors driving the result include very strong leasing activity in some of the assets, repositioning some of the assets in terms of enhancing foyers and building presentation that drive stronger rental levels, and also firmer capitalisation rates and discount rates applied by valuers because the demand for high quality assets is just so strong at the moment,” Taylor explained.