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KIPT increases profit by 3.2%

Wednesday 28th May 2003

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Kiwi Income Property Trust has reported a 3.2% increase in net income after tax to $44.75 million for the year to March 31 shrugging off a decline in consumer confidence in the last quarter of the financial year.

Total assets grew $31.6 million to $911.6 million, up from $880.0 million the previous year, while investors' funds stood at $665.9 million compared with $585.9 million, as at March 31, a rise of $80 million.

Kiwi Income Property Trust chairman, Jim Syme, said "the result is very pleasing and demonstrates that the trust, with its diversified portfolio of prime office and retail property assets, is well placed to weather uncertainty in financial markets and take advantage of an upswing in investor confidence, when it occurs.

"The defensive characteristics of the listed property trust sector and in particular Kiwi Income Property Trust are proving to be attractive to investors," Syme says.

Operating highlights of the financial year to 31 March 2003 include:

· Net income after tax of $44.75 million, up 3.2% on the previous year
· Successful completion of the 1:6 pro-rata rights issue in July 2002 raising $69.3 million for the partial funding of the Northlands Shopping Centre development in Christchurch
· $90.9 million expansion of Northlands which will see the centre double in size to 40,700m2, and become one of the largest enclosed malls in New Zealand
· The leasing of all 54 specialty store tenancies in Stage One at Northlands three months before the scheduled opening in July 2003
· Strong leasing across both the trust's commercial and retail portfolios increasing average occupancy, excluding Northlands, to 98%
· A $2.3 million increase in the value of the Royal & SunAlliance Centre to $204.5 million, with all areas fully leased
· An upwards revaluation in the Trust's portfolio by $6.1 million
· Successful completion of refurbishment of The Plaza's Foodcourt in Palmerston North yielding 15% on the $1.5 million in capital expenditure.

Syme said "the 3.2% increase in net income after tax was primarily the result of improved leasing across the portfolio and lower interest costs due to the repayment of debt with proceeds from the $69.3 million rights issue for Northlands.

"The $90.9 million expansion of Northlands will see the shopping centre increase in size from 20,785 m2 to 40,700 m2 on completion by Easter 2004. Five major retailers are confirmed as anchor tenants for the centre: Farmers, Pak 'N Save, The Warehouse, Hoyts Cinemas, and Countdown Supermarket. Construction is on programme and the development is within budget."

"Overall, leasing across both the Trust's retail and office portfolio was very strong with income streams secured by long-term commitments. Proactive leasing and tenancy remixes are enhancing the Trust's portfolio," Syme says.

The trust's strong performance during the 2003 financial year and changes in the NZSE40 Index to a new NZSE50 Index resulted in an improvement of the Trust's ranking to 12th, up from 24th last year, he said.

The trust's market capitalisation, calculated by multiplying the unit price by the number of units on issue, increased by $131.2 million to NZ$663.6 million as at 31 March 2003, up from $532.4 million.

Syme said the trust's management team was committed to maximising returns for unit holders and achieving stability and security of income across the trust's portfolio of property assets. The total annual return for the trust was 21.0%, compared with 11.4% for NZSE Property Index, and the NZSE Top 40 Gross index, which fell 2.8%.

On 28 May 2003 the trust successfully raised $25 million through a placement to fund the acquisition of Downtown Plaza in Hamilton's CBD and other retail projects.

The trust has a conditional contract to buy the centrally located Downtown Plaza that has 31 specialty retail tenancies, and is currently undergoing due diligence. Proceeds from the placement of 23,584,906 units at 1.06 per unit will repay debt if the purchase of the Downtown Plaza doesn't go ahead.

The new issued units rank equally with ordinary units and will participate in the dividend for the year to 31 March 2003, payable in June 2003.

A final dividend of 3.90 cents per unit gross has been announced by the Trust including imputation credits of 0.390 cents per unit bringing the total gross dividend for the year to 8.54 cents per unit, slightly lower than the previous year's dividend of 10.15 cents per unit gross.

Syme said the main reasons for this were the:
· Dilution impact of 54.6 million Class B units converting into ordinary units and participating in the dividend for the full year for the first time.
· Rights issue and short term loss of income from the associated Northlands development.

The trust's ratio of debt to total assets improved from 29.2%, as at 31 March 2002, to 22.4% a year later, largely due to the rights issue proceeds repaying debt.

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