Blue Sky just wrote down the value of student accommodation assets - and its shares climbed

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  • The first phase of independent asset revaluations has been carried out on 12 Blue Sky assets.
  • The company booked write-downs on student accommodation projects and the Wild Breads bakery.
  • Blue Sky has commissioned independent revaluations on each of its 93 investments .

The commencement of Blue Sky’s asset revaluation process has resulted in write-downs on some its managed investments, with student accommodation projects hardest hit.

Blue Sky said revaluations have been carried out on 12 of the 28 assets for which it earns a management fee.

That first phase of revaluations included:

  • The entire portfolio of student accommodation assets;
  • Three private equity investments — Wild Breads bakery, Sunfresh Salads and childcare operator Foundation Early Learning; and
  • A retirement living project in Brisbane.

One student accommodation project was written down by 35%, while delays in another project led Blue Sky to return $5 million to the separately-listed Blue Sky Alternatives Access Fund

Source: Blue Sky Limited

The company also said that sales for its Wild Bread bakeries had under-performed in the 2018 financial year, resulting in an aggregate decrease in value of $26 million.

“These asset revaluations are expected to lower Blue Sky’s net profit after tax (NPAT) for the year to 30 June 2018 by approximately $7 million,” the company said.

Blue Sky announced in mid-April that it would conduct an independent valuation review for each one of its 93 assets.

“Blue Sky further advises that as a result of the above mentioned revaluations, there is no material impact on its fee-earning assets under management announced on 7 May 2018,” the company said in a statement to the ASX.

As part of its May 7 announcement, Blue Sky withdrew its profit guidance for the 2018 financial year, citing uncertainty around asset valuations the project completion time frames.

The revaluations form part of Blue Sky’s efforts to restore market confidence, after its initial response to the claims of short-seller Glaucus Research were deemed inadequate.

The chaos that followed claimed the scalp of Blue Sky CEO Rob Shand, along with Chairman John Kain and other members of the board.

Blue Sky shares initially dipped this morning in the wake of today’s announcement, but have since rallied and a short time ago were up more than 7% on the day at $2.89.

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