National Property Trust pushes the boundaries

By Chris Hutching

Friday 5th April 2002

Listed National Property Trust is buying the Goddard Shopping Centre in Tauranga for $7.25 million with its recently acquired war chest.

The unconditional contract is due for settlement on May 1. The two-level shopping centre has 20 shops on the ground floor and two restaurants on the upper level.

The deal also includes an adjacent property that may be used for redevelopment in future. The purchase lifts the asset base of the trust to $120 million, a size that begins to look more attractive to institutional investors and fund managers, which may lift buying pressure for the units if they rebalance their portfolios to include stakes in the trust.

Trust chairman Paul Dallimore said Tauranga had an expanding population and high rate of economic development. The shopping centre has a rental return of 9.8% with potential for 11% when the vacant areas are leased and further retail and office developments are undertaken.

This week the price of the units traded on the Stock Exchange was unmoved at 95c.

National Property Trust's fortunes have lifted in recent months as a result of its steady 9-10% dividend yields over a long period.

Such yields have become increasingly attractive to individual investors and institutions compared to fixed interest deposits and volatility on overseas sharemarkets. Earlier the trust had struggled with several capital raisings but last December year raised $25 million through an issue of subordinated unsecured capital notes at $1 each, returning 9.5% per annum for an initial term to November 2004, renewable for two further three-year terms.

The trust also sold Hornby Mall at the end of last year for $23 million.

Some of the money raised from the notes issue and the sale of Hornby Mall is being used to develop the trust's main retail asset in Christchurch, Eastgate Mall, which included the recent purchase of an adjacent The Warehouse property for $9.1 million, representing a 10.4% capitalisation rate with a new 10 year lease to the national retailer.

In recent weeks the management team under Mr Dallimore has been looking further afield to widen the geographical spread of assets held by the trust in the North Island with the aim of building the size of the trust, providing greater management efficiencies and fees, and more attractive to bigger investors.

The last profit result for the half year ending November 2001 was 2.1 million on revenue of $5 million.

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