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DNZ posts $112.8 million first-half loss

Thursday 11th November 2010 2 Comments

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DNZ Property Fund's maiden result as a listed company was a $112.8 million net loss for the six months ended September 30, from a loss of $11 million a year earlier.

The bottom line loss included $31.8 million of the cost of buying the management contract previously owned by chief executive Paul Duffy and Alastair Hassell and an $86.3 million deferred tax liability as a result of becoming a listed portfolio investment entity (PIE) from July 1.

Before these items, the net result of $8.1 million was down 35.7% on the year-earlier interim result.

DNZ says the key benefits and drivers of listing were to provide liquidity and an improved share price. The shares last traded at $1.20 compared with their debut in August at 99 cents and the 97 cents a share issue price of its $45 million capital raising. However, the share price is still well below the adjusted net tangible asset backing of $1.57.

The company realised $31.3 million in asset sales in the latest period and an additional $39.7 million of sales have been contracted unconditionally to settle in the 2011 and 2012 financial years. The value of its property portfolio was $669.6 million at September 30 compared with $729.9 million a year earlier

“These sales have been at or close to valuations despite the difficult market conditions,” DNZ said. The proceeds have been used to repay bank debt and DNZ's loan-to-valuation ratio (LVR) at September 30 was 43.9% compared with 48.7% a year earlier.

During the six months ended September 30 DNZ completed 105 lease transactions including 34 new lettings for a rental of $2.9 million. The other transactions were rent reviews. The portfolio's current occupancy rate is 96% and the weighted average lease term is 4.4 years.

DNZ will pay a 2 cents a share dividend for the September quarter on December 10.

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Comments from our readers

On 11 November 2010 at 11:21 am Katherine said:
Surely the deferred tax liability is due to the change in the tax legislation to remove depreciation on commercial properties and not as a result of becoming a PIE.
On 12 November 2010 at 12:40 pm Peter Browne said:
I agree with Katherine that DNZ Property's becoming a PIE should not cause a large increase in deferred tax liabiliy, which is largely influenced by asset revaluations. If anything, the depreciation change should decrease DNZ's asset valuations. I should welcome a more detaied explanation from management.
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