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URBUS Properties Ltd lifts profit 20%

URBUS Properties Ltd lifts profit 20%

URBUS Properties Ltd has today announced an audited operating after-tax profit of $18.2 million, the final result for the company before it applies for a NZSE main Board listing in June. This profit result represents an increase of 20% over last year and exceeds the October 2002 Prospectus forecasts.

URBUS Chairman Denis Thom said, “The excellent performance has been the result of the continued strategy to grow the portfolio in overall size through strategic acquisitions and divestments, while at the same time rationalising the sector mix and reducing interest costs on debt.”

“A growth by acquisition of 75% in the size of the property portfolio to $394.5m and an increase of 20% in our operating after-tax profit, positions the company well for the proposed main board listing on the NZSE in June.”

The growth in the portfolio has been achieved in line with a determined effort to implement the sector and geographic mix strategy. The sector mix is now 32% industrial (last year 13%), 40% retail (40%) and 28% office (47%). The target is industrial and retail at 40% each and office at 20%. The portfolio is now 60% weighted towards Auckland.

“The Board is very pleased with the progress it and the Manager have made in implementing the agreed property portfolio strategy outlined in last years Annual Report” said Mr Thom. The portfolio has been independently re-valued at balance date at $394.5m which is a 1.65% increase. This increase is in addition to net gains of $879,000 from the disposal of 9 properties.

The 75% increase in portfolio size came from the purchase of 24 properties for a total of $192m. This included the purchase of 16 properties for $157m, in one major transaction for which shareholders overwhelmingly voted approval.

A further key strategy is to improve the liquidity of the portfolio with 50% of the properties valued at $10m or less. Currently it is 49%.

The portfolio’s average weighted lease term is 5 years and the percentage of over rented property now stands at just 3.8%. This is down from 7% since the inception of Urbus two years ago.

As at balance date Urbus had a loan to value ratio (LVR) of 43% due to the timing of an acquisition. It is the company’s intention to reduce this to between 35% - 40% over time. Current banking covenants allow a LVR up to 55%. Directors are comfortable with the current LVR position noting that the ratio will continue to decrease.

For the year ended 31st March 2003 the company paid a gross dividend of 9cps which was in line with prospectus forecasts. The earnings per share (EPS) was 10.48cents with the net tangible assets (NTA) increasing 1.4% to 93.04 cents. “These are key performance indicators for Directors so it is pleasing that the net tangible asset backing has increased” said Mr Thom.

During the year two major appointments were announced. “Peter Wilson joined the Board in January as another independent director and has brought additional strengths to our Board in the areas of financial management, banking and public company disciplines.” said Mr Thom.

“The appointment of Murray Barclay as CEO of Urbus Property Management Ltd is another pleasing development for the growth and success of URBUS. He has fifteen years experience in the property sector” said Denis Thom. Mr Barclay joins Urbus Property Management in June from Auckland International Airport where he has been General Manager Commercial for the last twelve years.

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