Kiwi Income Property Trust reports full year loss of $169m

Retail sales at Kiwi Income's Slyvia Park shopping centre in Auckland rose to $350 million, says Kiwi Income Property Trust. Photo / Kenny Rodger.

Kiwi Income Property Trust has reported a full year after tax loss of $168.9 million, but says it made a distributable profit of $61m - down 1.8 per cent from last year.

The trust, the assets of which include Auckland's Sylvia Park Shopping Centre, said the after tax loss was mainly due to an unrealised reduction in the value of the property portfolio and an adverse fair value movement in interest rate derivatives. The result compared to a net profit of $123m the previous year.

Unit holders are to receive a final cash distribution of 4c per unit, taking the full-year cash distribution to 8cpu.

Independent valuations dropped the value of the trust's portfolio by 10.1 per cent, or $215.1m, to $1.91 billion for the financial year to the end of March.

Sean Wareing, chairman of the trust's manager, said the cash distribution for the year to March 2010 was projected to be about 7.5cpu.

"Prospects for rental growth in the retail portfolio are inevitably constrained by current market conditions," he said.

"Subdued economic and investment activity and potentially higher unemployment will likely bring an end to the significant rental growth enjoyed by the office sector.

"Vacancy rates are expected to increase over the next two years, putting pressure on rental rates," said Wareing.

"Little can be done to affect movements in market rents. But the trust's portfolio benefits from defensive characteristics which will help maintain rental income performance in the current environment."

The trust's net rental income grew by 6.9 per cent to $133.7m in the latest year, while operating profit before tax increased by 4.8 per cent, to $69.9m.

A strong financial position was essential in the current market conditions, Wareing said.

Additional equity was raised with a $50m institutional placement, and was being followed up with a unit purchase plan opening on 18 May 18, together with asset sales of $38m.

At March 31, the trust's total assets were $1.92b, with secured bank debt of $634m representing 33.1 per cent of total assets.

The trust had $800m of committed bank debt facilities with a weighted average cost of bank debt of 6.45 per cent, down from 7.62 per cent at the end of March 2008, said Wareing.

No bank debt expired before the 2012 financial year.

Chris Gudgeon, chief executive of the manager, said 620 new leases, renewals or rent reviews were completed for over 145,000m2 of space during the past year.

That resulted in an overall rental increase of $6.66m, with an average compound annual growth rate of 5.7 per cent recorded from rent reviews.

Occupancy levels across the total portfolio remained high at 98.7 per cent.

Overall sales for the retail portfolio were $930m, excluding GST, for the year, down 2.2 per cent on the previous year, Gudgeon said.

Sales performance for major tenants -- supermarkets, department stores and cinemas -- rose 0.2 per cent, while specialty stores reflected lower discretionary spending, with a 4.1 per cent decline.

By increasing market share, annual retail sales at Sylvia Park had grown to $350m, the highest of any centre in New Zealand.

In Palmerston North, the $93m redevelopment of The Plaza Shopping Centre, started in March 2008, was on schedule.

- NZPA