DNZ looking out for opportunities

Sinking interest rates and leasing more space propelled listed landlord DNZ Property Fund to a bottom line $20.8 million profit.

Shane Solly of institutional investor Mint Asset Management said the business had enjoyed cheaper access to funds lately and this was one of the reasons for the lift.

"DNZ's performance benefited from judicious portfolio repositioning and lower interest rates," he said, citing good leasing progress.

OnePath's Craig Tyson said DNZ had returned a solid result with high portfolio occupancy driving a good operating performance and improved dividend guidance of 9c a share for the year ahead, up from 8.5c.

"While there was no new news in the result, the market continues to gain confidence in management to deliver strong portfolio metrics and distributable earnings slightly ahead of expectations," Tyson said.

The business completed 189 lease transactions for 232,122sq m in the last year, lifted annual earnings 27 per cent and signalled a bigger return to shareholders in the coming year.

Distributable profit, property investors' favoured way of measuring earnings since unrealised changes in property values are excluded, rose to $27.8 million, or 11.22c a share, in the year to March 31.

That compares with the previous year's earnings of $21.9 million, or 9.6c a share, the company said.

Net profit, including portfolio revaluations, was $20.8 million, compared to a net loss of $35.7 million, in a year when the company took a hit on its portfolio value and paid $31.8 million to bring management in-house.

Directors declared a final quarter dividend of 2.2c, taking the full-year payment to 8.5c a share, and expect to pay out 9c a share in 2013, following a change in distribution policy.

"DNZ is well-placed with high occupancy rates and long-term contracted rental income streams," chairman Tim Storey said.

"We will also continue to look for new opportunities and other initiatives to add value and further enhance the quality of our portfolio, either through investment in new properties or through our on-going proactive management of our existing tenants and lease tenure within the portfolio."

Shares closed up 3.81 per cent yesterday at $1.50.

DNZ lifted annual rental income to $52.9 million from $52 million across its 51 properties, occupancy rates rose to 98.7 per cent from 97.9 per cent, and the weighted average lease term increased to 5.4 years from 4.3 years in 2011.

The value of the property investor's portfolio rose to $658.3 million as at March 31 from $638 million a year earlier, and its bank borrowings increased to $267.3 million from $252.9 million, giving it a loan-to-value ratio of 40.6 per cent.

- Additional reporting: BusinessDesk