Kiwi Property Group pushes up interim net profit 164 per cent, gives tenants $7.4m rent relief

Kiwi Property Group declared a $143.2m half-year net profit after tax.

This figure was up 164 per cent up on the prior period and was boosted by a $93.6m lift in property revaluations.

The listed company with a market cap of $1.7 billion also reported that it gave tenants $7.4m in rent relief.

Operating profit before tax rose 8 per cent to $62.5m, driven by an increase in net rental income, which grew 11.5 per cent to $94.0m.

Mixed-use, office and other properties are valued at $3.5b, up 2.8 per cent, highlighting the strength of the company's portfolio.

Lockdowns put businesses under significant pressure, the company noted.

"A $7.4m rent relief provision was recorded in the first half of the financial year and a similar cost is expected for the second half. Kiwi Property is committed to sharing a fair proportion of the financial impact of the pandemic and supporting its small and medium-sized tenants, in particular, to successfully navigate the pandemic," it said.

Office asset values grew the most, with a fair value gain of 4.9 per cent to $1.1b.

The mixed-use portfolio, including Sylvia Park, LynnMall and The Base, gained 2.5 per cent to $1.7b.

Clive Mackenzie, chief executive, said the solid half-year was pleasing given the pandemic and its effects.

Kiwi's plans for build to rent apartments at Sylvia Park. Photo / supplied

"Kiwi Property's financial position and diversified property portfolio have remained resilient, despite the impact of Covid-19. The opening of the Sylvia Park level one expansion had a positive impact on sales, driving increases in both income and operating profit.

"We're operating in a challenging market and the full financial impact of recent lockdowns won't be known until the second half of our financial year. We enter that period in good shape though, well placed to tackle whatever comes next."

A $221m build-to-rent development has begun via the construction of 295 apartments at Sylvia Park towards it becoming a retail, office and residential community.

Kiwi hopes for a net yield of about 4.5 per cent and 10-year property internal rate of return of over 8 per cent.

"Build-to-rent is poised to become an important part of our portfolio, further diversifying our asset base, unlocking growth and promoting valuation uplift. With our large mixed-use landholdings, including Sylvia Park and LynnMall, we're in a unique position to deliver build-to-rent at scale in this country. Based on current plans, more than 1200 residential apartments could potentially be added to Sylvia Park in the next decade," Mackenzie said.

At LynnMall, consent has been granted for a 25-level mixed-use development with ground-floor retail, three commercial office levels and a 19-floor build-to-rent tower.

Kiwi Property Group chief executive Clive Mackenzie. Photo / Dean Purcell

Construction might start next year, pending funding and approval.

Shareholders will get an interim dividend of 2.75cps for the half-year.

"Despite the expected cost of Covid-19 rental abatements, the company continues to target a total dividend of no less than 5.30cps for the 2022 financial year, up from 5.15cps the year before," it said today.

Kiwi says it is one of the largest listed property companies on the NZX and is a member of the S&P/NZX 20 Index.

"We've been around for over 25 years and proudly own and manage a significant real estate portfolio, comprising some of New Zealand's best mixed-use, retail and office buildings."

S&P Global Ratings has a BBB (stable) rating on it.

Shares were on Friday trading around $1.14, down 11 per cent annually.