Kiwi Income Property Trust profit up 7.3%

By NZPA

Monday 16th May 2005

Kiwi Income Property Trust's profit grew 7.3% to $52.7 million in the year to March.

The trust said growth in its underlying earnings was strong with pre-tax profit up 18.5% to $66.47m.

Kiwi Income Property Trust (KIP) said it would pay a final dividend of 4.31 cents per unit which includes a imputation credits of 0.82 cpu, bringing the gross dividend for the year to 8.65 cpu, including imputation credits of 1.63 cpu.

The trust said the level of earning for the year had allowed it to retain 5% of net earnings to assist with ongoing financing requirements.

Chairman of KIPT's management company Kiwi Income Property (KIP) Sean Wareing said the "`outstanding" result was due to extensive leasing activity, strong rental growth, and focused, strategic portfolio expansion and redevelopment.

"The result marks a highly successful year for the Trust which continues to deliver consistently on its objective of maximising income and providing long-term sustainable returns to unit holders," Wareing said in a statement. KIPT's total assets increased by $163 million to $1.26 billion over the March year, while its total interest bearing debt rose to $341 million, representing 27% of total assets.

The increased level of borrowings was primarily due to property acquisitions, the acquisition of a 19.4% stake in rival Capital Properties NZ for $54.4 million and costs associated with its Sylvia Park retail development in Auckland. KIP chief executive Angus McNaughton, said the year's strong result had been achieved following excellent performances from both the retail and office portfolios.

McNaughton said KIPT's retail portfolio in particular had performed extremely well, "providing clear evidence of the quality and dominance of these properties in their respective markets".

Occupancy levels across the trust's retail properties had remained high at 99.3%. Across the trust's office portfolio, occupancy levels rose to a record 99.6%.

The trust purchased three properties during the year: Unisys House for $44.1m, the NGC Building for $19.4m and Intergen House for $4.2m. The buildings are adjoining properties in Wellington's CBD.

Meanwhile, HP House in Auckland was sold in September 2004 for $25.8m, and after year end, the trust unconditionally sold the AUT Faculty of Arts Building in Auckland netting about $29m.

McNaughton said progress on the trust's key Sylvia Park development had been a highlight of year.

He said construction of the 62,000sq m shopping centre on the site had already begun.

The trust has secured four anchor retail tenants for the site - The Warehouse, Foodtown, Pak'n Save, and a Hoyts 10-screen multiplex cinema. The total project cost for the retail stage is $363m including land and infrastructure costs.

McNaughton said the trust would fund the development utilising existing debt capacity, proceeds from the recent sale of the AUT Building, and the proceeds of a Mandatory Convertible Note (MCN) issue of between $110 million and $140 million planned for June.

Looking ahead, McNaughton said: "property sector fundamentals are expected to remain resilient, underpinning continued rental and leasing activity in the Trust's retail and office portfolios".

Subject to a continuation of reasonable economic conditions, the trust forecast a gross distribution of between 8.50 and 8.70 cents per unit for the year ending March 2006 year, taking into account both the Sylvia Park development and the MCN issue.

KIPT units were down 4c to $1.14 after the announcement, and have traded between $1.01 and $1.18 over the last 12 months.

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