KEY POINTS:
The cost of building the country's biggest shopping centre and the absence of a one-off financial gain last year resulted in an 18 per cent drop in returns from the country's largest listed property investor and developer.
Kiwi Income Property Trust made a net profit of $59.2 million for the year to March, down on last year's $72.1 million - a drop blamed partly on the cost of developing Sylvia Park at Mt Wellington and an unusual boost to last year's accounts.
Angus McNaughton, chief executive of the trust's manager, said a $15 million gain had elevated last year's net after-tax profit and that amount should be stripped out if any comparisons were to be made.
The cost of developing Sylvia Park had also reduced Kiwi's earnings because the centre was so large, McNaughton said.
Without that $15 million figure included in last year's result, Kiwi's net after tax profit rose 3.7 per cent in the latest period, he said.
That $15 million gain was generated when Kiwi sold a building at AUT in Auckland and its stake in the formerly listed Capital Properties, bought by AMP Capital Investors and delisted from the NZX.
McNaughton said brokers and analysts were well aware of the one-off gain last year and had taken this into account in forecasting this year's result. They had expected Kiwi to pay unitholders just 9.5 cents per unit. But instead, the trust had done better and was paying 9.6 cents per unit, McNaughton said.
Unitholders had enjoyed a total return of 38 per cent in the past year, coming from a rising unit price and their annual distribution, McNaughton said. Kiwi's unit price had risen from $1.28 in March last year to $1.65 in March this year, he said.
Kiwi's property portfolio rose in value by $219.8 million in 2006-07. Sean Waring, chairman of the trust's manager, had a bullish forecast for next year.
"Despite a higher interest rate environment, property sector fundamentals are expected to remain resilient," he said. "There is demand for quality space in both the retail and office markets, underpinning solid rental growth in the trust's portfolio."
He also cited strong and continuing demand by investors from overseas and in New Zealand for good assets.
This made it harder to buy property but also added value to the trust's holdings. McNaughton said the trust would open the last stage of Sylvia Park next month.
Three large stores, 40 shops, a medical centre, creche, dentist, radiologist and other services would open on June 28, he said. The centre was 100 per cent leased and had added great value to the trust, McNaughton said.
