Kiwi Income distributable income up 12.6%

Wednesday 18th May 2011

Kiwi Income Property Trust lifted its full year distributable income 12.6% to $68.8 million, with growth in rental income from its retail portfolio underpinning the result.

Net rental income for the year to the end of March was up 3.1% from the year before to $137.8 million.

Sean Wareing, chairman of the manager of the trust, said the rise in rental income was due to the trust's shopping centre portfolio, with strong performances from Sylvia Park and The Plaza, and a contribution from latest acquisition LynnMall.

An $82.4 million, or 4%, fall in portfolio value in the past year to $1.98 billion was mainly due to the impact of the February earthquake in Christchurch, Wareing said.

Independent valuations reflected the uncertainty in Christchurch created by the quake, with a $52.1 million, or 17.9%, cut in the combined value of Northlands Shopping Centre and PricewaterhouseCoopers Centre. That fall in value had not affected distribution to unit holders.

If the Christchurch assets were excluded, the fall in the trust's portfolio value was 1.7%.

Excluding the PricewaterhouseCoopers Centre, the trust's office portfolio fell $32.3 million or 5.1% reflecting a rise in vacancy rates and softening market rents in the Auckland and Wellington markets.

The unrealised reduction in the value of the trust's property portfolio, along with other non-cash adjustments, resulted in an after tax loss of $26.4 million. The restated net loss from the year before was $8.5 million.

The full year cash distribution to unit holders would be in line with guidance at 7c per unit.

As at March 31 the trust's total assets were valued at $2.11 billion, with secured bank debt at $759 million.

A "robust" financial position had enabled the trust to accommodate the fall in asset values from the global financial crisis and the Christchurch quake, Wareing said.

The trust had been able to favourably refinance bank debt facilities that were due to expire, positioning itself to invest counter-cyclically with the purchase of LynnMall Shopping Centre last December for $174 million.

"This represented a rare and strategic opportunity to invest in an Auckland regional shopping centre at a purchase price that was immediately accretive to earnings."

The trust was encouraged that favourable terms of trade and robust trading partner growth continued to support a positive outlook for the rural economy, Wareing said.

"In time this is expected to prevail over the disruptive effect that the Christchurch earthquakes are having on economic recovery."

Based on the outlook for the trust, and subject to economic conditions, a distributable profit after tax of about 7c per unit was being projected for the current financial year.

NZPA

Comments from our readers

No comments yet