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PFI says strong portfolio activity drives higher revenue

Wednesday 8th August 2018

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Property For Industry lifted its dividend as strong portfolio activity drove higher revenue. Net profit jumped but largely due to a one-off in the prior period. 

The Auckland-based company said net profit in the six months to June 30 was $29.6 million, or 5.93 cents a share, versus a loss of $5.6 million in the prior year, or 1.25 cents. It noted, however, the prior year's loss was largely due to the $42.9 million cost of buying out its management contract. 

The reduction in management fees, however, contributed to a $2.9 million reduction in expenses although that was partially offset by a $1.6 million increase in administrative expenses incurred from January to June 2018 in lieu of management fees.

"Significant portfolio activity and increased earnings and dividends are the headline news," chair Anthony Beverley said in a statement. 

Over 58,000 square meters, representing more than 8 percent of PFI’s existing portfolio by rent, was leased during the interim period to 11 new and existing tenants for an average increase in term of 6.5 years, Auckland-based PFI said.

Total income lifted 10 percent to $53.4 million with the fair gain on investment properties rising 33 percent to $7.95 million. Its net rental income for the six months increased by $3.7 million or 10.5 percent to $39.3 million. Funds from operations rose 21 percent to $22.2 million while adjusted funds from operations were up 13 percent to $17.5 million. 

The company's distributable profit rose 9.6 percent to 4.23 cents per share, versus 3.86 cents per share in the first half of the prior year. The company will pay a second-quarter final cash dividend of 1.80 cents per share up from 1.75 cents per share in the prior year. The record date is Aug. 22 and the payment date is Aug. 31. 

Looking ahead, it confirmed its guidance for a full year cash dividend totally 7.55 cents per share, up 0.1 cents on the prior year. 

“We want to take this opportunity to reiterate the view we have expressed in recent times: that the PFI Board recognises the importance of a rewarding dividend yield for shareholders, but we are mindful of balancing the competing priorities of maintaining or gradually increasing cash dividends, whilst at the same time growing AFFO earnings to cover those dividends," said Beverley.

PFI’s portfolio is diversified across 93 properties and 146 tenants, with 98.1 percent occupancy and a weighted average lease term of 5.39 years, weighted towards Auckland industrial property. It expects occupancy of around 100 percent is reached by late 2018 to early 2019. 

The book value of the portfolio was $1.24 billion on June 30 versus $1.21 billion on Dec. 31. 

PFI said it made no changes to its bank facilities during the first half of 2018 and is "considering options," including a second senior secured bond issue to extend and diversify borrowings. It has a gearing of 31.4 percent. 

The shares last traded at $1.74 and have increased 3.6 percent so far this year. 


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