DNZ Property Fund, the landlord which listed last August and has properties valued at $637 million, predicted lower dividends next year but exceeded one analyst's expectation with its annual result.
DNZ, with 50 properties and 283 tenants, announced this year's 9.6c dividend would be about 8c next year.
However, Buffy Gill of Goldman Sachs & Partners NZ said the business made more than predicted in the year to March 31, 2011.
"The result was slightly ahead of our expectations, with an underlying distributable profit after adjusting for the one-off tax benefit of $21.1 to $21.2 million. This compares to our forecasts for $20.2 million, the original initial public offering prospectus guidance of $19.2 million and recently updated guidance on April 20 of $20.8 million to $21.1 million," she said.
DNZ paid no tax in its third provisional period, boosting the result. But it had decided to retain the future benefits of the tax ruling for the 2012/13 years, she said. That would reduce its payout ratio to shareholders in the next two years.
Tim Storey, DNZ chairman, said that after its annual balance date, DNZ had received a "positive binding tax ruling" on the deductibility of the $31.8 million cost of internalising the company's management contract.
Discussions on how best to use the money resulted in the board deciding to keep it "to enhance longer-term earnings", Storey said.
The board has now amended DNZ's dividend policy to pay out a lower amount - 75 per cent to 85 per cent of distributable profit.
DNZ said its shares traded at 97c when it listed on August 16, lifted to $1.24 by March 31 and were yesterday steady at $1.31 after the result was issued.
DNZ Property forecasts dip in dividends to 8c
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