Kiwi Income says portfolio fell by $162m

Friday 27th March 2009

Kiwi Income Property Trust, New Zealand's largest listed property investor, said the value of its portfolio fell in the six months ended March 31, reflecting the impact on property values from global economic turmoil.

The portfolio's value was lowered by $162.2 million to $1.91 billion after an independent valuation, the trust said in a statement. The latest revaluation brings the decline in the full year to 10.1%.

"The decline in the value of our property portfolio over the past year is a reflection of adverse global economic conditions and negative sentiment in financial markets worldwide," said Sean Wareing, chairman of the trust's manager.

Still, "underlying operating earnings remain sound as the trust continues to benefit from the strength of its premium assets, its sector diversification in both retail and office properties and its diverse and high-quality tenant base," he said.

As at March 31, the occupancy rate is expected to be 98.6% with an average lease term of 4.3 years. Bank debt amounted to 33% of total assets and adjusted undiluted net tangible asset backing per unit was probably about $1.36.

The trust said its weighted average cost of bank debt at March 31 is expected to be about 6.4%, down from 7.6% a year earlier. None of the trust's bank debt expires before 2012.

"Although further softening in valuations may occur, in these more uncertain times, the Trust remains well positioned with its diversified high quality investment portfolio providing solid underlying operating earnings, Wareing said.

The trust reiterated its forecast annual cash distribution of eight cents per unit. The trust's units were unchanged at 98 cents and have fallen about 2% this year.

By Jonathan Underhill

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