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DNZ extends average lease term

Wednesday 25th January 2012

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DNZ Property Fund, which failed in a merger bid with Argosy Property Trust last year, extended its average lease term and lifted its occupancy rate in the final three months of 2011.

The Auckland-based company raised its weighted average lease term (WALT) to 5.17 years as at Dec. 31 from 4.32 years at the end of March, after it secured three Foodstuffs supermarkets into long-term contracts. Its occupancy rate rose to 98.7 percent from 97.9 percent, and by the end of the year, it had 265 tenants across 51 properties.

“The purchase of the three Foodstuffs supermarkets has not only enhanced the long-term surety of income by extending the company’s WALT to over five years, but has also added another quality tenant to the portfolio,” chief executive Paul Duffy said in a statement.

In November, DNZ reported distributable earnings of $13 million, or 5.27 cents per share, in the six months ended Sept. 30, up from$9.8 million, or 4.69 cents a share, in 2010.

DNZ’s property portfolio value fell to $608 million as at Sept. 30 from $700 million a year earlier. That’s in a year where the property investor sold two properties to pay down bank debt, while at the same time buying three Foodstuffs supermarkets in Napier, New Plymouth and Wellington with fixed 18-year leases.

The company’s top 10 tenants are Progressive Enterprises, Bunnings, the government, Fletcher Building, Foodstuffs, ASB, Meridian Energy, Mitre 10, Lion and Westpac, who make up about 48 percent of the property investor’s total contract rental. As at Dec. 31, the net contract rental was $57.8 million, up from $56 million as at March 31.

The shares rose 0.8 percent to $1.28 in trading today.


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