Kiwi Property Group posted a 43 per cent fall in annual profit as the value of its property portfolio rose at a slower pace than a year earlier, and it expects more moderation in the broader real estate market.
Net profit fell to $143 million, or 11.1 cents per share, in the 12 months ended March 31, from $250.8m, or 20.2 cents, a year earlier, the Auckland-based company said in a statement. The difference was largely due to a $41m increase in the fair value of Kiwi Property's portfolio in the latest financial year, compared to a $175.9m boost in 2016. Funds from operations, the company's new preferred earnings measure which strips out a number of items including fair value movements, rose 13 per cent to $102.8 million.
"While the property sector is currently strong, we do expect the high level of value growth we have witnessed in recent years for investment grade real estate to begin to moderate as interest rates continue to rise from historic lows," chairman Mark Ford said. "Supportive economic and property market fundamentals, in combination with the robustness of our property portfolio, provides us with confidence the company will continue to deliver a strong financial performance."
Kiwi Property has been selling properties to fund its new development plans including expansion of its Sylvia Park, New Lynn and Westgate sites in Auckland. However, the company's recent bid to sell two Wellington properties to NPT and buy the smaller company's management contract was knocked back last month.
The company will pay a full-year dividend of 6.75 cents per share, in line with guidance, and up from 6.6 cents a year earlier. It projects that will increase to 6.85 cents per share in the 2018 financial year.
