PFI maintains third-quarter earnings and dividends
News release to New Zealand Stock Exchange
November 2, 2009
Listed industrial property investor Property For Industry (PFI) says it is satisfied with the way the company has maintained consistent earnings and shareholder dividends through a period of significant economic uncertainty.
The company has sold five properties over the past 16 months (including one due to settle this month) for a total of $48.85 million. The proceeds were used to repay bank debt. PFI general manager Ross Blackmore said the company had been able to largely offset the impact of the divestments on earnings through lower interest costs, new rentals from development projects, rent reviews in 2008 and to date in 2009, and continued high portfolio occupancy.
“In the current year, PFI shareholders have received the same level of net dividends as in 2008, yet the company also has the advantage of lower gearing to fund future growth opportunities through our in-house development pipeline and opportunist acquisitions.”
PFI’s rentals for the nine months to September 30, 2009, were $23.626 million, down $908,000 or 3.7 percent compared to the previous corresponding period. However, lower borrowings resulted in a decrease in interest costs ($861,000 or 12.6 percent) and direct costs were also down by $412,000 or 15.1 percent.
PFI’s net operating profit after tax for distribution for the nine months was 3.3 percent or $383,000 higher than the previous corresponding period, at $11.888 million. Net earnings per share, based on distributable profit, were up 2.4 percent to 5.58 cents per share.
The third-quarter net dividend has been maintained at the same level as in 2008, at 1.650 cents per share plus imputation credits of 0.548 cents per share, meaning that PFI shareholders have for the year to date received the same level of net dividends as in 2008.
The record date for the third-quarter dividend is November 16, 2009 and payment will be made on November 26. 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.
The company’s net result for the nine months under NZ IFRS takes into account the previously-announced $20.917 million unrealised net reduction in the value of PFI’s portfolio as at June 30, 2009, in combination with other non-cash adjustments such as an unrealised gain on the mark-to-market value of PFI’s interest rate swaps. PFI has reported a net loss after taxation and unrealised losses of $11.140 million for the nine months.
Despite uncertain market conditions, the company has completed 16 lease transactions to date in 2009 (as previously announced) and recently sold another non-core asset, 16-18 Fisher Cres, Mt Wellington, at its June 30, 2009 value of $3.5 million. Once settled, the sale will reduce the company’s (debt to total assets) gearing to 28.7 percent, well below its self-imposed maximum of 35 percent. Mr Blackmore said PFI’s five asset sales reflected a market capitalisation rate of 8.76 percent, and the properties had an average WALT (weighted average lease term) of 3.76 years.
The sale of 16-18 Fisher Cres had also dealt with the company’s last scheduled lease expiry of 2009, and the company had a strong focus on 2010 expiries.
Commenting on PFI’s 2009 rent review programme, Mr Blackmore said 25 of the 32 rent reviews scheduled for the year have been completed, adding $398,000 to the company’s annual rent roll. The average increase of 6.56 percent equates to 2.52 percent compounding annually over the average 2.55-year review period. Looking ahead to 2010, Mr Blackmore said it was pleasing that so many of next year’s rent reviews are on structured or CPI mechanisms, providing a degree of stability regardless of market rental conditions.
As the company nears the end of its 15th year since listing, Mr Blackmore noted that the industrial leasing market was picking up, and owner-occupier purchasers were starting to re-emerge, particularly for smaller industrial properties. Interesting acquisition opportunities were also starting to appear. The company had evaluated several such opportunities in recent months; however, to date none of these had met PFI’s strict investment criteria.
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