PFI increases full-year distributable profit, holds dividend
News release to New Zealand Stock Exchange
February 22, 2010
Listed industrial property investor Property For Industry (PFI) has announced a 1.4 percent increase in net operating profit after tax for distribution for the year to December 31, 2009 and will maintain its full-year net dividend at the same level as the previous year.
PFI general manager Ross Blackmore said rentals for the year were 3.2 percent lower at $31.428 million as a result of asset sales, with three properties sold during 2009 to reduce gearing and bank debt and provide capacity for new opportunities.
Interest costs and management fees for 2009 were both down significantly.
PFI’s net operating profit after tax for distribution was $15.920 million (2008: $15.699 million).
Net earnings per share for the year, based on distributable profit, were up 0.5 percent to 7.46 cents per share.
“Despite challenging market conditions and a reduction in rental income following the company’s property sales, to have increased net profit and earnings is a very pleasing outcome,” said Mr Blackmore.
Consistent high occupancy has been a major contributor, with a large number of leasing transactions secured with both new and existing tenants, leading to a year-end portfolio occupancy rate of 99.6 percent. The portfolio weighted average lease term (WALT) was 4.52 years – very close to the 4.67 years at the end of 2008.
PFI’s directors have maintained the fourth-quarter net dividend for 2009 at the same level as in 2008 and PFI shareholders will therefore receive a final dividend for 2009 of 2.425 cents per share plus imputation credits of 0.439 cents. This brings the total gross dividend for 2009 to 9.074 cents per share, a 2.8 percent increase over the previous year, while the net dividend of 7.18 cents per share is consistent with 2008.
The balance of 2009’s distributable profit – approximately $570,000 – will be added to retained earnings.
The record date for the fourth-quarter dividend is March 8, 2010 and payment will be made on March 18. [March 18 is the correct payment date - the previously-published date of March 15 is in fact the strike price date for the dividend reinvestment scheme]. The company’s dividend reinvestment scheme is in place for the dividend and the discount rate for shares issued under the scheme remains at 2.5 percent.
PFI’s annual independent portfolio revaluation as at December 31, 2009 (following an earlier valuation review to June 30) has resulted in an unrealised net reduction in portfolio value of $28.371 million or 7.67 percent over the 12 months. The valuation reduction is unrealised and does not impact the company’s contracted revenues or the profit available for distribution to shareholders.
The unrealised portfolio revaluation loss, along with other NZ IFRS non-cash adjustments such as unrealised gains in the fair value of interest rate swaps and deferred taxation, means that PFI recorded a full-year loss after tax and unrealised losses of $12.514 million for 2009, compared with a loss on a similar basis of $31.912 million the previous year.
PFI’s gearing ratio (debt to total assets) at balance date, taking into account the revaluation, the sale of three properties during 2009 and the acquisition of a $22 million Mt Wellington distribution centre in December, was 33.2 percent.
Net tangible assets per share (NTA) reduced from its December 31, 2008 value of $1.24 per share to $1.10.
Commenting on the year’s portfolio highlights, Mr Blackmore said the company’s rent review programme for 2009 is complete and has generated additional annual contract income of $448,000. The average increase of 6.36 percent equates to 2.65 percent compounding annually over the average 2.36-year review period.
Of the 16 leases expiring during 2009, the existing tenants had either extended their lease terms or new tenants had been secured.
“Over the past 12 months, PFI has welcomed 18 new tenants to the portfolio,” said Mr Blackmore. “The latest is communications equipment importer and distributor Atlas Gentech (NZ) Ltd, which has taken an new eight-year lease at 76 Carbine Rd, Mt Wellington. This property will be extensively refurbished.”
PFI’s development programme also continues successfully. Following on from the three new projects completed in 2009, PFI has recently committed to a $7 million project for Dunlop Living Ltd (see image below) at Stage 2 of the company’s Peninsula Business Park in Avondale. Stage 2 is currently leased to a longstanding tenant until mid-2011 and this project deals with two-thirds of that lease expiry, 18 months in advance.
PFI shareholders will be aware that the Government is considering intended changes to the New Zealand tax system, some of which will affect the property sector. If implemented, these changes are anticipated to have a negative effect on the company’s distributable profit.
PFI is New Zealand’s only listed company specialising in industrial property investment, and is managed by AMP Capital Investors.
For further information:
Ross Blackmore, General Manager, Property For Industry
Ph 09-307 8393 or 029-307 8393
Email ross.blackmore@ampcapital.co.nz
