DNZ earnings fall 14pc, signals $80m capital raising

Tim Storey. Photo / Brett Phibbs

DNZ Property Fund, a diversified property investor, reported a 14 per cent fall in annual earnings and plans to raise $80 million in a placement to institutional investors and a share purchase plan to help pay for two new acquisitions.

Distributable profit, property investors' favoured measure of earnings which strips out unrealised movements in the value of their portfolios, fell to $24 million, or 9.64 cents per share, in the 12 months ended March 31 from $27.8 million, or 11.22 cents, a year earlier, the Auckland-based company said in a statement.

Net profit jumped 119 per cent to $45.5 million, or 18.25 cents per share, with rental income up 0.1 per cent to $53.5 million.

"Operationally, management has again performed strongly in reducing DNZ's lease expiry risk and maintaining DNZ's high portfolio occupancy rate, which is one of the highest in the industry at 99.6 per cent," chief executive Paul Duffy said. "DNZ's portfolio re-weighting strategy is also evident in these results with the acquisitions at Albany in Auckland and the pending acquisitions of the Silverdale Centre and the Westgate Zone 5 Land."

DNZ also announced plans to raise $80 million to partially fund its recent acquisitions in Auckland, though the fund raising isn't conditional on the purchases going ahead.

The shares have been halted as a bookbuild process is held for a $60 million placement to institutional and eligible investors, with a further $20 million to be raised via a share purchase plan.

DNZ's shares fell 1.2 per cent to $1.71 in trading yesterday, and have gained 7.9 per cent this year. The stock is rated an average 'hold' based on five analyst recommendations compiled by Reuters, with a median target price of $1.78.

The property investor's board declared a fourth-quarter dividend of 2.25 cents per share, with a record date of June 7, payable on June 20. That takes the annual payment to 9 cents, and DNZ expects to deliver the same return in the 2014 financial year.

Chairman Tim Storey said management will continue to focus on maintaining the high occupancy level and rental income streams in the coming year, and is on the hunt for new acquisitions "to add value and further enhance the quality of our portfolio."

The value of DNZ's portfolio of 48 investment properties was $635.3 million as at March 31, down from $647.7 million a year earlier. The property investor has been reshuffling its portfolio, with $33.6 million of asset sales.

Storey said the board has started looking for a new chief executive, with Duffy set to leave by March 31, 2014.