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PFI lifts full-year profit 14.3%

Monday 21st February 2011

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Listed industrial property investor Property For Industry (PFI) reported a 14.3% rise to $18.2 million in net operating profit after tax for distribution, as rentals rose 3.5% to $32.5 million.

General manager Ross Blackmore said the rise in rentals for the year to the end of December, compared to the year before, was due to new developments, rent reviews and an acquisition late in 2009.

After taking into account an unrealised net fall in portfolio value of $2.6 million, and other non-cash adjustments such as unrealised changes in the fair value of interest rate swaps, PFI recorded a full-year profit after tax of $10 million, compared with a loss of $12.5 million in 2009.

Mr Blackmore said PFI's continued high occupancy level contributed to its performance, with the year-end occupancy rate at 99.5%.

Interest costs for the year - the company's largest single expense item - rose 2.6% to $8.1 million, with higher debt levels offset by lower interest rates.

Tax was down $1.4 million or 39.1% to $2.2 million as a result of prior-year tax adjustments.

A fourth-quarter dividend of 2.425c per share is to be paid plus imputation credits of 0.255c, bringing the total net dividend paid for 2010 to 7.18cps, the same as the previous year.

PFI said that in common with other property entities, it had adopted early an accounting amendment that allowed it to reverse a one-off non-cash adjustment to the balance of deferred tax liabilities on building valuations, which had been shown in its interim financial statements.

The Government's decision to remove the ability to depreciate buildings with useful lives of more than 50 years for tax purposes came into effect for PFI on January 1.

The company previously indicated it expects its 2011 distributable profit to be cut by about 4-5% as a result of a higher effective tax rate.

Blackmore said PFI's portfolio valuation had confirmed the stabilisation of industrial rents and values, and recent research showing the wider Auckland industrial vacancy rate had improved from 5 to 4.5% was further evidence of a gradual recovery.

PFI, which specialises in industrial property investment, has a portfolio of 52 properties with a total gross value of about $348.7 million.



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