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Kiwi Income posts $89.2M profit, distributable income rises 4.2%

Wednesday 16th May 2012

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Kiwi Income Property Trust's manager said the property investor turned to an $89.2 million annual net profit from a $26.4 million loss, reflecting the insurance payout on its PricewaterhouseCoopers building in Christchurch offset by property valuation cuts.

Pretax profit rose 6.4% to $81.3 million in the year ended March 31 while distributable income after tax was up 4.2% to $71.7 million. After a final cash distribution of 3.5 cents a unit, the full-year distribution will be seven cents a unit, in line with guidance, it said. Mark Ford, chairman of the trust's manager, is forecasting the current year's payout will be 6.6 cents a unit.

“We are encouraged that the positive performance and outlook for New Zealand's rural sector is beginning to feed through to the broader economy as evidenced by the recovery in retail sales in our shopping centre portfolio,” Ford said. “We do, however, see the need to remain cautious in the current economic environment.”

Rental income in the year rose 5.4% to $144 million. “In a challenging year, the trust has delivered a pleasing result from both an operating and balance sheet perspective,” Ford said. The trust ended the year with a $2 billion portfolio, up $24.2 million from the previous year, gearing of 35.6 percent, down from 35.9 percent previously, and net tangible assets per unit of $1.09, up from $1.07 the previous year.

“The highlight of the year has been the positive sales performance of our shopping centre portfolio with sales growth of 8.4 percent to $1.43 billion,” Ford said. The trust's flagship Silvia Park shopping centre in Auckland saw its value rise 5.8 percent to $500 million. Ford said the trust continues to make good progress on its ASB Bank head office development in the Wynyard quarter in Auckland and.

It has also had to make defensive investments in earthquake strengthening the Majestic Centre in Wellington and the Northlands shopping centre in Christchurch as well as on “the competitive repositioning” of its Centre Place shopping centre in Hamilton.

The latter involved completing a food court and securing a Farmers department store on a 15-year lease as anchor tenant of the next stage of the redevelopment. “Against this backdrop, the trust has performed creditably as it continues to benefit from the strength of its premium assets, its sector and geographic diversification and its high quality tenant base,” Ford said.

The trust has delivered a cumulative average total return, including unit price movements and the reinvestment of all cash distributions and imputation credits, of 9.7 percent since inception in December 1993, he said.

The manager agreed on a $69.3 million insurance payout on the PricewaterhouseCoopers building. KIP units are unchanged at $1.095, up from January's low at 99 cents but down from last November's $1.11 high.

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