Simon Woodhams, chief operating officer, said of the annual result out today: “We continue to deliver stable cash returns for investors.”
The company acknowledged the reason for the bottom-line loss.
“PFI generated a loss after tax for the year of $13.9m (loss of 2.70 cents per share), down from a profit of $452.8m (profit of 89.97 cents per share) in the prior year.
A $56.7m fair value loss on the independent valuation of the company’s property portfolio, as compared to a $392.5m fair value gain in the prior year, was the main contributor to this reduction,” it said.
It also acknowledged a $29.1m impairment of the goodwill from the merger with Direct Property Fund a decade ago. That too contributed to the full-year loss.
Rising interest rates were also cited for the loss.
PFI has about $216m or 10 per cent of its real estate in properties where it sees redevelopment opportunities.
It is redeveloping a 3.9ha site on Bowden Rd, Mt Wellington and is beginning a redeveloping a 10.4ha Springs Rd site in East Tāmaki.
Its plans 4.3ha of new warehousing space on those two sites. That will include offices, covered canopies, yards and around 280 carparks. The projects will take 18 months of construction beginning in April.
“These projects have an estimated total incremental cost of around $140m and once complete, are expected to be accretive to both earnings and net tangible assets on a per share basis. Consistent with PFI’s climate commitments, all facilities will target Five Green Star ratings,” the business said today.
In the last year, it sold properties at 39 Edmundson St, Napier, 330 Devon St East and 20 Constance Street in New Plymouth.
Rent reviews were completed on 102 leases, giving an average annual uplift of 4 per cent on $62.8m of contract rent.
CBRE forecasts industrial rental growth in the next five years to average 5.5 per cent per annum for prime properties and 3.5 per cent per annum for secondary properties, PFI said.
Around 104,000sq m or 15 per cent of PFI’s portfolio by rent was leased during the year to seven new and 26 existing tenants for an average increase in term of five years.
At the end of the year, the company’s portfolio was fully occupied and 7.8 per cent of contract rent is due to expire this year.
PFI also refinanced its $100m loan from the Bank of New Zealand during the year, extending its expiry by a year to next July.
The weighted average term to expiry of its bonds and bank facilities is three years and the company has more than $120m of available bank liquidity.
An as-yet-unutilised US$250 million (NZ$401m) private placement facility established with Pricoa Capital Group, part of Prudential Financial, Inc. provides the company with access to long-term funding which it might use for developments.
Shares have been trading down 18 per cent annually, around $2.30.
