Property for Industry interim profit lifts

CATHERINE HARRIS
Last updated 10:37 13/08/2014

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Industrial property fund Property for Industry has reported an interim profit of $14.4 million after tax, up from $11.9m a year ago, as the company divests non-core assets.

The company made a distributable profit of 3.80 cents per share, up 10.5 per cent on the previous first half, pushed up partly by an increase in rental income. The company will pay a second-quarter cash dividend of 1.75c per share.

Total cash dividends were 3.50c per share, up 2.9 per cent on a post-merger basis.

PFI, which holds 79 industrial properties across the country with a 99 per cent occupancy rate, posted operating revenue of $32.1m. This was more than double the previous period last year following PFI's merger with Direct Property Fund in July last year, as were its operating expenses of $13m.

During the period the company took advantage of strong conditions and sold four non-core properties for a total of $11.3m, and made another $15.9m from property sales after the balance date.

The company said its sales programme was largely complete for the year, but it would continue to recycle the proceeds into "accretive core industrial opportunities".

It also invested $15.4m into 143 Hutt Park Rd in Lower Hutt industrial suburb Seaview, which it will lease for 10 years as a warehouse and distribution point for Ebos Corporation's Masterpet subsidiary.

The fund also began a $3.6m development for Z Energy in Wiri and leased more than 63,000 square metres of space to 18 new or existing tenants.

Chairman Peter Masfen said the fund had recorded a "sound financial performance", and its full-year guidance remained unchanged, with total cash dividends expected to be about 7.25c per share.

The current environment was very conducive to rental growth, he said.

"Market conditions during the first half of 2014 have continued to evidence firm investment yields being achieved, which is reflective of future rental growth expectations and the weight of capital seeking property exposure, particularly industrial assets with long-term leases."

PFI's joint general manager Nick Cobham said the outlook for the rest of the year was that prime industrial yields, which had firmed to levels at or below the previous peak in 2007, would moderate as interest rates rose.

"However, rental growth, which is already beginning to gain strength, will continue to gather momentum, reflecting the pass through of increasing land values, construction costs and improving occupancy rates across the industrial sector."

PFI had resolved again to suspend its dividend reinvestment scheme, a decision which it would review quarterly.

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