Local Shopping Reit gave evidence of decent operational performance in a third-quarter trading update, even as it faces a weakening property market.
The property group has signed rent reviews on 73 units since 31 March, on average at 2.3 per cent above previous rents, and relet 30 vacant units, all but three of them in line with estimated market rents (the three exceptions included stepped agreements, so that rents will reach market rents over a three-year period).
Ominously, the vacancy rate rose slightly, from 10.6 per cent to 11 per cent - although half of this was intentional, as the group tries to reconfigure units to make them attractive to the national supermarkets for their convenience store formats. But the main risk for investors remains the fragile state of the regional property market. Management noted that more distressed stock had been released by banks on to the market in recent months, which will depress prices.
