Industrial property investor's profits up in tough year

Listed industrial property investment company Property for Industry(PFI) has announced a 1.4 per cent increase in profits to $15.9 million for the 2009 year.

The increased profit comes despite a drop in rentals of 3.2 per cent to $31.4m after the company sold three properties to reduce gearing, bank debt and boost its war chest.

Interest costs and management fees for 2009 were also both down significantly, the company said.

"Despite challenging market conditions and a reduction in rental income following the company's property sales, to have increased net profit and earnings is a very pleasing outcome," said general manager Ross Blackmore.

PFI will maintain its full-year net dividend at 2.425 cents per share, the same level as the previous year, plus imputation credits of 0.439 cents.

This brings the total gross dividend for 2009 to 9.074 cents per share, a 2.8 per cent increase over the previous year, while the net dividend of 7.18 cents per share is consistent with 2008.

Shares in PFI were worth $1.13 at the close of trading on Friday.

Consistent high occupancy was a major contributor to the result, with a large number of leasing transactions secured with both new and existing tenants, leading to a year-end portfolio occupancy rate of 99.6 per cent, said Blackmore.

The balance of 2009's distributable profit - approximately $570,000 - will be added to retained earnings.

An independent portfolio revaluation as at December 31 saw an unrealised net reduction in portfolio value of $28.4m, or 7.67 per cent, over the 12 months.

The valuation reduction was unrealised and did not impact the company's contracted revenues or the profit available for distribution to shareholders.

The revaluation loss, along with other NZ IFRS non-cash adjustments such as unrealised gains in the fair value of interest rate swaps and deferred taxation, meant that PFI recorded a full-year loss after tax and unrealised losses of $12.5m for the year, compared with a loss on a similar basis of $31.9m in 2008.

PFI's gearing ratio, or debt to total assets, taking into account the revaluation, the sale of three properties during 2009 and the acquisition of a $22m Mt Wellington distribution centre in December, was 33.2 per cent.

Net tangible assets per share (NTA) reduced from its December 31, 2008 value of $1.24 per share to $1.10.

Blackmore said the company's rent review programme for 2009 was complete and has generated additional annual contract income of $448,000.

The average increase of 6.36 per cent equated to 2.65 per cent compounding annually over the average 2.36-year review period.

- NZPA