Property For Industry posts 1H loss on internalisation costs
By Tina Morrison
Aug. 9 (BusinessDesk) - Property For Industry, the industrial property investor, posted a loss in the first half of its
financial year after paying for the termination of its management agreement.
The Auckland-based property investor reported a loss of $5.6 million, or 1.25 cents per share, in the six months ended
June 30, from a profit of $22.5 million, or 5.01 cents, a year earlier, it said in a statement. The earnings included
$42.9 million of costs for terminating its management contract and taking the function in-house and a $6 million gain in
the value of its properties.
Excluding the impact of internalising the management contract, Property For Industry's first-half profit rose 12 percent
to $25.2 million. Operating revenue lifted 1.4 percent to $35.7 million while operating expenses gained 4.2 percent to
$13.5 million.
Property For Industry's 83 properties were valued at $1.1 billion as at June 30, ahead of their $1.01 billion value a
year earlier and its occupancy rate remained steady at 99.5 percent. The company said it had inked 11 leases over the
period and undertaken 41 rent reviews, resulting in an average annual uplift in rent of about 2.4 percent, which is
expected to boost its distributable profit, a measure of earnings which strips out unrealised movements in the value of
the property portfolio.
"The first half of 2017 has delivered strong leasing outcomes," said chair Peter Masfen. "The company's results for the
full year are expected to see a continuation of these outcomes and are also expected to be assisted by the recent
internalisation. The company has therefore increased the guidance for full-year distributable profit from 7.5-7.70 cents
per share to 7.70-7.90 cents per share."
Property For Industry will pay a second-quarter dividend of 1.75 cents per share on Sept. 1, taking the total first-half
dividend to 3.5 cents, in line with the prior period. The company said it expects its annual dividend to total 7.45
cents, up 0.1 cents on the prior year.
The company said it sold the Sistema industrial property in Penrose, Auckland, to the owner occupier during the first
half for $14.3 million, taking its total divestments over the past three years to about $47 million. It still considers
about 5 percent of its portfolio "non-core" and may look to divest further properties over the medium term when it
considers value has been maximised.
Meanwhile, it acquired an East Tamaki property in Auckland for $14.2 million, taking its total acquisitions over the
past three years to about $77 million. It also recently committed to the $5 million development of surplus land at
Manukau, Auckland, for a generic storage and distribution warehouse slated for completion in July 2018, taking the total
value of its developments over the last three years to about $34 million.
The company's $50 million short-term credit facility with ANZ Bank New Zealand, taken out to secure funds for the
internalisation costs, was reduced to $40 million after the sale of its Penrose property. It has maintained its $375
million syndicated bank loan facility and said it's considering other funding options including a senior secured bond
issue to extend and diversify its borrowings.
Its shares last traded at $1.655, and have gained 3.6 percent the past year.
(BusinessDesk)
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