Thursday 12th August 2021
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Precinct Properties New Zealand Limited reported its financial results for the 12 months ended 30 June 2021 today. The business has delivered a strong result for the FY21 period illustrating the portfolio’s resilience in another year navigating the challenges from COVID-19. Total comprehensive income after tax was $179.9 million compared with $35.1 million in the previous period with the movement attributable to a strong revaluation gain of $282.9 million for the full year, offset by the termination payment of Precinct's management services agreement.
Pleasingly, the business has continued to meet market guidance and deliver further growth for our shareholders despite the unusual year with Adjusted Funds from Operations (AFFO), which adjusts for several non-cash items, increasing by 3.1% to $85.3 million (June 2020: $82.7 million) or 6.48cps. This strong result reflects the demand for Precinct's premium grade portfolio, maintaining high occupancy levels during the year and generating income from high quality occupiers.
Full year dividends paid to shareholders and attributed to the 2021 financial year totalled 6.50 cps, representing a year on year increase of 3.2% and an AFFO dividend payout ratio of 100%.
Net property income increased 27.9% to $124.4 million (June 2020: $97.2 million) with the increase primarily driven by the completion of several development projects, namely Commercial Bay, during the year. After adjusting for developments and transactions, like for like net property income growth was 1.2% higher than the previous comparable period.
While Commercial Bay Retail performance has been impacted over the period, foot traffic and sales are showing significant improvement post the last lockdown in March with food & beverage continuing to be the strongest performer, particularly Harbour Eats.
Generator was also impacted by COVID-19 with a reduction in events and lower occupancy leading to a net operating income loss of $0.9 million for the period. Occupancy and events bookings are now showing a solid recovery with Generator continuing to support Precinct's portfolio leasing and long term strategic objectives. The reduction in profitability has led to the independent valuation of Generator recording an impairment of $9.8 million.
As at 30 June 2021 Precinct’s portfolio totalled $3.3 billion (June 2020: $3.0 billion). Precinct’s net asset value (NAV) per share at balance date was $1.52 (June 2020: $1.45).
Further financial information can be found within the 2021 Annual Report at https://www.precinct.co.nz/annual-reporting/2021-annual-results.
Outlook and guidance
Precinct has demonstrated remarkable resilience during the 2021 financial year. Our business continues to benefit from a well-established and clear strategy.
Our portfolio is well positioned benefiting from some of the highest quality occupiers in New Zealand, a long weighted average lease term, very little expiry risk, and a high degree of structured growth. We have successfully completed $1.5 billion of development projects over the past 6 years. Across our developments, we have created significant shareholder value. It is this track record in capability that we are now looking to leverage with future transactions. These portfolio characteristics give us confidence in our earnings outlook and the potential for further dividend growth.
The Board expects Precinct’s dividend for the 2022 financial year of 6.70 cps to be paid. This represents 3.1% year-on-year growth in total cash dividends to shareholders.
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