PFI weathers global storm

By Campbell McIlroy

Friday 2nd November 2001

Listed investment vehicle Property For Industry has weathered the storm of September 11, providing shareholders with a steady third-quarter dividend of 1.3c a share.

The dividend, which carries imputation credits of 0.3c a share, resulted from net earnings of $8.7 million for the nine months to September 30, up 16.4% on the same period last year.

The increase is largely due to increased rentals, up 17%, from 10 new properties in Mt Wellington bought over the new year.

The result yet again failed to excite analysts, due largely to the company's monotonous ability to perform.

One analyst said: "The beauty of it is it does exactly what you expect it to do. If they ever put out a result that surprises me I'll be giving you a call."

While PFI, and the property sector as a whole, have fared well since September 11, many global indices are now back to where they were before the attacks on the US.

But the lower interest rate environment could see some of the listed stocks improve over the short term.

PFI general manager Peter Alexander said agents had talked of strong investor demand for industrial properties in the up to $2-3 million range.

Mr Alexander said the increase in demand was unlikely to have an impact on rents but if the level of demand was sustained over the long term it would obviously have some effect on values.

He said there was a lack of stock to meet the demand.

While demand for properties could see valuation increased demand for decent investment returns in a low interest environment could also provide an upside to defensive property stocks.

One analyst said many bank term deposits would be maturing between now and the new year and the new rates being offered would probably be 4.5%.

With after-tax returns of just 3% the analyst said investors may well look to invest their funds in the property sector through listed vehicles such as PFI.

Mr Alexander would not comment on whether PFI would be likely to buy or dispose of any properties before the end of the year.

With a debt to asset ratio of 29%, out of a maximum of 35%, it would seem unlikely.

But the company did manage to claim last year's largest deal by selling a number of its less desirable properties to fund the purchase of 10 sites in Mt Wellington.

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