Kiwi Property posts 27% gain in first-half profit as property revenue growth outpaces expenses

Monday 21st November 2016

Kiwi Property Group, the country's biggest listed property investor, posted a 27 percent gain in first-half profit and affirmed its guidance for an uplift in its full-year dividend.

Profit was $45.6 million in the six months ended Sept. 30 from $36 million a year earlier, the Auckland-based company said in a statement. Total income including revenue from property rose 6.7 percent to $114.8 million even after the year-earlier period was bolstered by $5.9 million of litigation settlement income.

Kiwi Property expanded its portfolio in the first half, settling its acquisition of 50 percent of The Base shopping centre in Hamilton while selling Centre Place - South in that city, opening the remaining retail tenancies at its Westgate Lifestyle retail centre in Auckland and starting construction of an office building at its Sylvia Park site. Today the company said it will spend $9.1 million expanding the dining lane at Sylvia Park and said planning is advanced on creating a "world-class town centre" at the site, with an investment of about $180 million in the shopping mall.

“We have grown revenue and increased dividends, while continuing to build a stronger underlying portfolio of property assets," said chief executive Chris Gudgeon.

In August, the company said it planned to build an $80 million office tower by June 2018 to expand Sylvia Park and had signed insurer IAG New Zealand as an anchor tenant. Later that month it raised $125 million selling bonds that mature in September 2023. It also increased its bank facilities by $200 million and extended the term while securing a lower weighted average cost of finance debt to 4.72 percent, it said.

Rental income from its $1.8 billion portfolio rose about 14 percent to $86.9 million in the first half, while 'like-for-like' rental income rose 3.9 percent. Gudgeon said the weighted average lease term (WALT) for its portfolio increased to 5.5 years, the longest in 10 years, while the WALT for its offices rose to a record for the company of 9.6 years.

The property company said it incurred only minor damage to its buildings following the Nov. 14 earthquake.

It will pay an interim dividend of 3.375 cents a share, in line with its guidance and affirmed a full-year payment of 6.74 cents, from 6.6 cents a year earlier.

Kiwi Property's shares fell 0.4 percent to $1.43 and have gained 6.3 percent this year.

BusinessDesk.co.nz

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