Property for Industry lifts profit distribution

PFI

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Listed industrial property investor Property For Industry (PFI) says its net operating profit after tax for distribution lifted 3.2 percent to $11.5 million for the nine months to September.

That was after making a $400,000 provision for doubtful debts as a precautionary measure, and allowing for a $250,000 depreciation clawback on a property sale.

An unrealised portfolio revaluation loss, along with other accounting non-cash adjustments, meant the company recorded a loss after tax and unrealised losses for the nine months of $21.6m, compared with a profit of $11m the previous year, PFI said.

A review, by independent valuers DTZ, resulted in an unrealised net reduction in portfolio value of $27.7m or 6.6 percent over the nine-month period.

PFI general manager Ross Blackmore said the reduction in value was partly mitigated by some market rental growth of about 1 percent over the nine months, and the company's lease restructuring and add-value activity. PFI's portfolio was 1.9 percent under-rented as at September 30.

During the past five years, PFI's annual portfolio revaluations had resulted in valuation increases totalling almost $137m or 46 percent, Mr Blackmore said.

The current reduction in value was an unfortunate but inevitable consequence of global economic conditions, which had eroded the value of most asset classes.

The reduction did not affect the profit available for distribution to shareholders.

Shareholders would receive a third-quarter dividend of 1.650 cents per share plus 0.394c imputation credits. That brought the total net dividends paid in the year to date to 4.75cps, 1.6 percent higher than a year ago.

The company's rentals for the nine months rose 6.4 percent to $24.5m, despite the fact that PFI sold two of its properties during the period at their December 31, 2007 book values.

The higher revenue was the result of previous acquisitions and development projects and higher rents following rent reviews, PFI said.

Mr Blackmore said PFI had renewed its $120m banking facility with the Bank of New Zealand for a three-year term, extending until September 2011.

PFI's gearing ratio (debt to total assets) based on the revised portfolio value was 27.4 percent, well below the company's self-imposed maximum of 35 percent. That provided ample capacity for development and add-value projects.

PFI's portfolio was 99.4 percent occupied at the end of September, and tenant inquiry remained solid, Mr Blackmore said.

PFI owns a portfolio of 57 properties with a total gross value of $388.9m.

PFI shares were down 1c to $1.05 in the first hour of trading, compared to the year high of $1.45 in January.

NZPA