ING to reduce payout after posting $63m loss

ING Property Trust, which owns 95 buildings valued at just over $1 billion, made a $63.1 million loss for the year and will pay its unitholders less in future.

Mike Smith, chairman of the trust's manager, said this year's distribution of 8c per unit would be sliced back to 7.5c per unit next year and the market was particularly challenging.

Last year, the trust made a $71.7 million profit but Smith said the trust's properties had been devalued by $89.9 million compared to valuation gains of $43 million last year.

The trust has sold 17 properties for $116 million in the last six months and used this money to manage its debt ratios, he said.

It wants to sell more real estate soon too. The trust has seven properties under conditional sale contracts for $46 million.

Smith said the trust had New Zealand's most diversified portfolio of properties and the continuing demand for real estate selling for under $20 million meant it was able to use capital to cut debt.

The trust has changed its strategy and put a focus on risk mitigation, capital management and portfolio structuring, Smith said.

The trust's total assets were $1.082 billion and it has debt of $429 million.

"The 39.6 per cent debt-to-total-assets ratio remains below the trust deed limit of 50 per cent and banking covenant of 45 per cent. After the successful asset sales programme, the directors recently reduced the limit of the trust's banking facility from $600 million to $500 million. The ANZ facility has a renewal date of September 2010," the trust said yesterday.

The trust has a spread of industrial, commercial and retail buildings including Albany Mega Centre, the bulk retail strip opposite the new Westfield.

Jeremy Simpson, Forsyth Barr analyst, said the result was in line with expectations and next year's distributions had beaten expectations which were as low as 7.2c per unit.

"They're continuing to sell properties and that's good," he said.

However the trust is one of the more highly geared listed real estate entities but Simpson said owning smaller properties was an advantage because it allowed the trust to find more buyers. He has a "hold" recommendation on the stock.