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Kiwi Income Property Trust posts loss

Thursday 20th May 2010

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Kiwi Income Property Trust posted a full-year loss of $12.4 million, reflecting a reduction in the value of its portfolio as a result of the world-wide decline in property prices.

Still, the trust said it would distribute as forecast a full-year payment of 7.5 cents a unit to its holders.

“It is pleasing to note that the trust continued to deliver solid underlying operating performance in challenging market conditions,” noted Sean Wareing, chairman of the manager of the trust.

Distributable profit was $61.1 million, up 0.2% on the previous financial year.

Even after the sale of two assets in the first half of the financial year, the trust’s net rental income was unchanged at $133.7 million and operating profit before tax increased by 5.0%, to $73.4 million, Wareing said.

“The Trust continued to benefit from the strength of its premium assets, its sector diversification in both retail and office properties, and its diverse and high quality tenant base,” Wareing said.

During the year, independent asset valuations reflected the prevailing adverse economic and financial market conditions and the resultant impact on business and consumer confidence.

As a result, the book value of the Trust’s portfolio dropped by 3.9%, or $74.7 million, to $1.85 billion for the financial year to 31 March 2010. The decline resulted from a softening in capitalisation rates and market rentals, the latter across the office portfolio in particular.

In line with previous guidance, unit holders will receive a final cash distribution of 3.75 cents per unit, bringing the Trust’s full-year cash distribution to 7.50 cents per unit. This represents a payout ratio of around 99% of operating earnings with the value of the Trust’s distribution reserve increasing to $11.6 million.

The manager “intends to retain these funds in reserve until such time as a more consolidated economic recovery becomes established and global financial markets exhibit less volatility.”

The record date for the final distribution is 4 June 2010, and the payment date is 23 June 2010.

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