Precinct Properties expects 2016 earnings per share to decline as asset sales end

Wednesday 19th August 2015

Precinct Properties New Zealand expects earnings per share to fall this year and dividends to remain unchanged as it focuses on development after completing its asset sale programme.

The Auckland-based listed property trust forecast a dividend of 5.4 cents per share for the 2016 financial year, the same level as the past two years, it said in a statement. It expects earnings before performance fees of about 6 cents per share in 2016, down from 6.19 cents in 2015, and 6.24 cents in 2014.

Precinct is shifting its focus to a growing market in Auckland, the nation's largest city, and away from the softer corporate market in Wellington, the nation's capital. It doesn't expect any further asset sales in the 2016 financial year after announcing the sale today of its officer tower at 125 The Terrace for $65 million, following on from $209 million of asset sales in the 2015 financial year. The sales have cut the size of its Wellington portfolio to $506 million from $690 million in 2014, and reduced its exposure to the Wellington corporate market. Its Auckland properties are valued at $1.04 billion.

The company has raised $174 million of equity through a pro-rata entitlement and secured $173 million of long-term borrowings and is focused on the development of its Auckland projects at the Wynyard Quarter and the Downtown Shopping Centre, and of its Bowen Campus in Wellington.

"The board and management believe it is appropriate to focus on long-term value growth," the company said. "Over the coming years as the company executes its development programme and the associated risks are reduced, it is anticipated that dividends will grow. This growth is a reflection of the solid earnings growth and value created from the completed developments."

The company today posted a 4.4 percent increase in net profit to $122.4 million for the year ended June 30.

Precinct shares rose 0.9 percent to $1.55.

BusinessDesk.co.nz

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