Challenger Diversified Property Group (CDI) posted a net loss of $13.7 million for the half year to 31 December 2009 after allowing for property revaluations and write-downs of $42.4 million. The loss was an improvement on the previous corresponding period when the company posted a $58.6 million loss.

The company reported a 23% increase to operating profit, which totaled $25.6 million in 1H FY10. CDI attributed this to lower financing costs.

The group said net tangible assets per unit (“NTA”) was 65c primarily impacted by property revaluations, down from 69c following the entitlement offer in September 2009.

CDI confirmed a distribution for 1H10 of 2.05 cents per unit (“cpu”) and reaffirmed its distribution guidance for FY10 of 4.2 cpu.

The company also reaffirmed its full-year earnings per unit of 5.2 cents.

CDI Fund Manager Trevor Hardie said valuations on several properties had been adversely impacted as a consequence of near-term lease expiries, however said the group expects some recovery when leases are renewed or new deals are signed.

“Importantly, we believe that cap rates are peaking and we should see property values stabilising in 2010,” Mr Hardie said.

He added that the CDI intends to evaluate acquisition opportunities, as well as reactivating its development pipeline and further enhancing its portfolio by recycling properties.

”However, our focus remains on proactive leasing and asset management, to ensure we continue to produce strong cashflows whilst working to close the discount between unit price and NTA,” Mr Hardie said.

As at 1453 AEDT, CDI shares were down 1c to 48c.