NPT Limited announces pre-tax profit of $9.1 million

NPT Limited announces pre-tax profit of $9.1 million for Half Year

NZX-listed property company NPT Limited today announced a pre-tax profit of $9.1 million for the six months to 30 September 2012. This compares with a loss of $12.9 million for the same period last year.

NPT’s chief executive Kerry Hitchcock said, “This excellent pre-tax profit figure is partly attributable to the rise in value of the NPT’s property portfolio from the comparable period last year when there were considerable unrealised write-downs mostly relating to the ongoing effects from the earthquakes on the company’s Christchurch properties. This portfolio revaluation, together with the reduction in funding costs resulting from the company’s buyout of two long-dated interest rate swaps, has contributed significantly to the rise in NPT’s pre-tax profit.”

Shareholders will receive a dividend of 0.575 cents per share for the quarter ended 30 September 2012. Imputation credits of 0.224 cents per share will be attached.

The company’s trading profit for the half year was $3.0 million before abnormal expenses and unrealised adjustments, compared with $5.4 million for the same period in 2011.

Mr Hitchcock said that trading profit for the six months to 30 September 2012 is a very good result despite the drop from the comparable period last year. “Last year’s higher half year profit included extraordinary insurance payouts for earthquake damage to 26 shops at Eastgate. This year’s first half year result brings the company’s operating profit figure back into line with current trading conditions; rental income has softened, but on the upside there have also been a reduction in operating costs and interest payments.

“A highlight for the company over the period has been the rejuvenation of Christchurch’s Eastgate Shopping Centre after it suffered damage in the 2011 earthquakes. The centre has risen $5.3 million in value, new leases have been signed and more are in the pipeline. Foot traffic has increased and brisk Christmas trade is expected.”

NPT’s property portfolio was valued at $126.30 million at 30 September 2012, up $8.15 million from $118.15 million on 31 March 2012. During this period $0.99 million of capital expenditure was incurred. The major contributor to this valuation increase was from Eastgate which rose in value from $35.50 million on 31 March 2012 to $40.80 million as at 30 September 2012.

Driven by a strong demand for well-placed industrial property, Christchurch’s Print Place at Middleton rose in value from $12.5 million to $12.7 million over the six month period. On 15 November 2012, outside the reporting period, the company signed an eight year lease at Print Place with the Canterbury District Health Board for 2,700m2 of space and 65 car parks.

Christchurch’s Natcoll House continues to be the subject of a material damage insurance claim from the 2011 earthquakes. Its valuation remains at $12 million. Negotiations continue with the building’s insurers, says Mr Hitchcock.

In September, the company sold its Wellington property at 342 Lambton Quay for $24.5 million to Robt. Jones Holdings Limited. On 7 November NPT announced the unconditional sale of its Napier retail property, Ocean Boulevard, for $4.521 million; settlement takes place on 21 November 2012. This property is included in the portfolio revaluation at 30 September 2012.

NPT has terminated its head lease obligations, at no cost, on two Christchurch properties – the Avonhead Shopping Centre and Hornby’s HWMC Warehouse property. These properties were a distraction to management, and these two lease terminations will enable the company to better focus on its own properties.

Strong leasing activity over the six month period lifted NPT’s weighted average lease term (WALT) from 3.4 years at 31 March 2012 to 6.2 years at 30 September 2012.

Significantly contributing to this increased WALT was Heinz Wattie’s signing an extended lease for 15 years (to 2027), for its Hastings National Distribution Centre, for 50,000m2 of space. The warehouse has increased in value from $24.75 million in March to $27 million (9.1%) over the six month period.

Mr Hitchcock adds, “The Eastgate Shopping Centre has, since it received its CERA certification in April, experienced strong leasing enquiries and rental activity. Its reconfigured ground floor now has leases in place for Lincraft, the Australian fabric, craft and furnishing store, PaperPlus and Number One Shoes. NPT’s leasing team continues to follow strong leads for the remaining spaces at the Centre.”

Two new leases are in place for Auckland’s AA Centre with AA Insurance and the Department of Internal Affairs signing leases for six and two floors respectively.

“NPT’s board is very pleased with this positive half year result. The increase in value in the company’s property portfolio is very satisfying as is the strong level of leasing activity.

“The last six months has seen a consolidation of the company’s property holdings with the sale of a lower yielding property and the termination of two head lease arrangements; this will not alter the forecast annual dividend for the 2012-2013 year of 2.3 cents per share net. Looking ahead, NPT will focus on property investments that will provide both yield and growth; also where the type of property and its scale will create management and cost efficiencies. The company is well positioned for future acquisitions and growth, and to provide good returns for our shareholders,” says Mr Hitchcock.

ends

© Scoop Media