Property for Industry interim profit falls
New Zealand's only listed industrial property owner says companies are increasingly willing to sign up to new long term leases but are still able to demand incentives in return.
NZX-listed Property for Industry (PFI) said in the three months to March 31 its distributable profits were $3.57 million, an 8 per cent fall on the same period a year ago, while rents fell 4.9 per cent to $7.41m.
General manager Nick Cobham blamed the fall on property sales in previous periods, as well as lower occupancy, which stood at 96.2 per cent on March 31, down from 99.4 per cent a year earlier.
Despite the fall PFI negotiated eight new leases or extensions during the period, with its weighted average lease term increasing by six months to 4.34 years.
PFI has 49 properties, all but five of which are in the Auckland region.
Cobham said while there had been a general reluctance to commit to long term leases in recent years, companies were showing increased confidence to commit, although when signing up to leases of a decade or more, the market was typically demanding a month of free rent a year.
''We believe occupants who are out there are ready to commit long term, but they want to see something for it, a bit of buy in from the landlord, saying ''we'll commit long term but we want to see a bit of love'', if you like,'' Cobham said.
''People are optimistic and they think we're through the worst of it, but they're hardly breaking down the door.''
Despite the drop in profits, PFI said it would maintain its quarterly dividend of 1.55 cents per share, payable to shareholders on the register on May 21.
At 10:30am shares in PFI were up half a cent at $1.175.