Understanding property valuations

Property valuations are a core part of managing our commercial property funds, directly linked to the value of your investment. Regular revaluations are essential to ensure that valuations remain transparent, fair, and current. However, we recognise the valuation process can be complex or misunderstood by some investors.

Whether you're a first-time or long-term investor, we aim to help you feel informed about how your investment is managed and performing. In this article, PMG’s GM Funds, Mike Barton, summarises how valuations work, why they matter, and what to expect during revaluation periods.

How property revaluations work

A property revaluation is a professional assessment of a property’s market value at a point in time. Independent registered valuers, selected from an approved panel, conduct these assessments based on a range of factors, including:

• Location
• Building quality and condition
• Lease terms and rental income
• Tenant covenant strength
• Market evidence (comparable sales and leasing activity)
• Economic conditions
• Other factors, such as seismic and environmental considerations.

Each property in our funds is revalued annually as at 31 March (or more frequently if needed). These are not internal estimates or what we think a property is worth, but evidence-based assessments by third-party experts grounded in market activity at a specific date.

Why it matters

Property valuations are important to investors because they are key to:

• to determining a fund’s Net Asset Value (NAV), which drives the value of your investment (what each share/unit in a fund is worth), forming the basis for:

• the price at which investors can join or exit the fund (re-assessed no less than annually); and

• calculating returns on your investment (such as gross cash yield)

• benchmarking relative performance against properties, sectors, or funds in the same market environment; and
• determining a fund’s loan-to-value ratio (LVR), an important indicator of financial health representing the fund’s borrowings as a proportion of the aggregate valuation of a fund’s properties.

What we're seeing right now

Commercial property valuations have been challenged over the past two years by higher interest rates and market uncertainty, which has been reflected in your share/unit values in PMG’s funds. As interest rate reductions continue to be realised, a more balanced and positive outlook is emerging for the commercial property sector and the value of your investments.

As the current revaluation cycle concludes, green shoots are already emerging as anticipated. Across PMG’s portfolio average like-for-like property values have increased by over 2% in the past 12 months (following a more modest increase in the prior year), supported by active management, value-add initiatives, and improved leasing outcomes. The outcome of the 31 March 2025 revaluation cycle will be reflected in the upcoming Year in Review for each fund, with more information to be shared at the AGMs in August (following finalisation of audited financial statements).

What lies ahead

Outcomes across commercial property sub-sectors and locations will continue to vary; some will continue to show resilience, while others may be impacted by changing tenant demand, subdued market activity, or shifting demographics.

In the context of the value of your investments and the properties underpinning them, our focus remains on preserving your capital, spending it wisely to enhance portfolio performance, and striving for growth in the value of your investment long-term.

To support this:

• our retail funds are intentionally structured to support diversification across property types, geographies, and tenant - helping to reduce valuation volatility and support sustainable returns;
• we continue to actively manage leasing and value-add capital expenditure projects to drive as much long-term value upside as possible for investors; and
• as markets evolve, we will continue to actively manage each fund, and each property, to deliver optimal risk-adjusted outcomes for investors. This will include selling properties at the right time in their lifecycle, and investing in properties that present opportunities for stronger returns in future.

If you're still unsure what property valuations mean, or how they relate to your investment, don’t hesitate to reach out to your Investor Relationships Manager or explore our updated FAQs and Glossary of Terms for a refresher.

This article is part of our Investor Education Series, designed to build understanding and confidence across your investment journey with PMG. Stay tuned for more topics soon.

Disclaimer: The information in this article is of a general nature and was current as at April 2025. It is not intended to be regulated financial advice for the purpose of the Financial Markets Conduct Act 2013, and does not take your individual circumstances and financial situation into account. PMG does not provide financial advice on whether or not an investment in one of its funds is right for you. Please seek advice from a licensed financial advice provider before making any investment decisions.