Investors in listed Property for Industry can expect lower dividends as the property company's earnings continue to be hurt by expiring leases and vacant properties.

The company yesterday reported a rise in net profit of 6 per cent to $7.046 million in the six months to June 30, 2012, from the same time last year.

But that reflected one-off gains which offset a higher deferred tax bill and a 5.9 per cent fall in gross rental income to $14.7m. Distributable profit , which adjusts for the fair value changes and other items, fell 4.9 per cent to $7.6m.

The second quarter dividend of 1.5 cents per share will be maintained, taking its half-year dividend to 3.1cps. The company has forecast the year-end dividend will fall to from 6.5cps to 6.9 cps this financial year, down from 7.1 cps in 2011.

Craigs Investment Partners analyst Chris Byrne said both the result and outlook were weaker than expected.

“Conditions obviously remain difficult as occupancy rates are subdued compared to historical levels,” he said.

The company faces an increase in the percentage of leases due to expire, from 7.4 per cent in 2012 to 13.6 per cent in 2013 and 17.8 per cent in 2014.

General manager Nick Cobham said occupancy fell to 96.1 per cent from 97.4 per cent in the year to June 2011.

Part of the company's strategy to turn that figure around was to change the type of properties within the portfolio through buying more industrial properties and selling those that it doesn't consider core or thinks are obsolete, he said.

- © Fairfax NZ News