Property Trust Announces Interim Profit Of $11.43m
29 January 2008
National Property Trust Announces Interim Profit Of $11.43m
The National Property Trust (NPT) today announced an increase in net surplus after tax and asset revaluations for the six months ended 30 November 2007 to $11.43 million, up from the $5.23 million recorded in the previous corresponding period.
Reporting under NZ IFRS for the first time, NPT gross revenue rose significantly from $10.46 million in 2006 to $23.10 million in 2007. Gross revenue for 2007 included property revaluations of $11.10 million (there were no property revaluations in the corresponding period in 2006).
Net rentals increased 17.02%, or $1.68 million, to $11.53 million following positive rental reviews and new rentals received following the acquisition of the Heinz Wattie’s warehouse early last year.
Net surplus before tax rose significantly, up from $1.39 million to $13.69 million. After normalising for property revaluations and performance fees in 2007 and distributions to unit holders in the corresponding period in 2006, net operating surplus before tax increased 12.6% or $543,000.
Distributable profit for the period increased 28.3%, or $876,000, to $3.96 million, with distributions per unit relatively unchanged at 2.4 cents. Operating expenses were controlled rising just 1.06%, reflecting the strong focus on costs and application of the purchasing efficiencies employed by the Manager, St Laurence group.
Kevin Podmore chairman for NPT says, “Today’s result reflects the ongoing focus on operational and leasing activity and selected value-add developments, which have contributed to an increase in the value of the Trust’s investment properties. This along with management’s focus on costs, despite a challenging interest rate environment, has enabled the Trust to deliver a satisfactory half year result.”
Mr Podmore says that entering the Portfolio Investment Entity (PIE) regime during the period has enabled tax benefits to be provided to the majority of NPT unit holders. At special meetings held in November 2007, both unit and Convertible Preference Unit (CPU) holders voted to convert the CPUs into ordinary units earlier than originally planned in order to allow the Trust to enter the PIE regime. “NPT now being a PIE will enhance the return to the majority of investors going forward, with no tax payable on distributions for New Zealand resident holders,” Mr Podmore said.
John Crone general manager for National Property Trust Limited says the six months to 30 November 2007 was a busy and positive period for the Trust. “We made significant rental negotiation progress, attracting several national retailers to our retail properties and created opportunities to add further value to the portfolio by developing existing assets. Vacancy across the portfolio now represents only 1.05% of the total floor area.”
At Ocean Boulevard mall in Napier, JK Kids Gear renewed its lease for a further six years, national homeware retailer Living & Giving commenced trading and Ezibuy established a purpose-built store. Eastgate Shopping Centre in Christchurch announced in July 2007 that it had secured leading surf-wear retailer Amazon to its stable of tenants, delivering a 100% occupancy rate to the mall.
NPT also announced and commenced re-development on its Osborne Street frontage at the Rialto Centre in Newmarket, Auckland creating four new specialty retail stores. This project involves a long term view to transform Osborne Street into a vibrant space which has character and a boutique-like feel.
During the period, NPT indicated its intention to take advantage of the buoyant property market and to reduce Trust debt levels by selling three properties, namely Sel Peacock Drive in Henderson, Auckland; Logical CSI House in Wellington; and the Gill Street office building in New Plymouth. Post balance date, NPT announced it had sold CSI Logical House in Wellington and had a conditional contract in place on its Gill Street property in New Plymouth.
The Manager has confirmed a gross dividend distribution of 1.20 cents per unit for the quarter ended 30 November 2007, which will be paid on 3 March 2008. No imputation credits will be attached to this distribution. In order to align the distribution to the new balance date, the next distribution will be for the four months ending 31 March 2008.
Mr Crone says while the first six months of the 2008 financial year has been productive, going forward the Trust is expected to continue to demonstrate its commitment to adding value, attracting new and stable tenants to its portfolio and reducing operational costs.
“We expect the property market to ease in the next six months, as rising interest rates and a slowing economy begin to take effect on the overall market. However net rentals are expected to continue to remain solid and development activity will continue to add value to the portfolio.”
The National Property Trust (NPT) is an NZX-listed property vehicle with more than $313 million of commercial, retail and industrial properties in its portfolio. NPT owns properties in Auckland, Napier, Tauranga, Wellington and Christchurch. Its assets are managed by The National Property Trust Limited, owned by Australasian property-related finance and funds management company St Laurence Limited. The St Laurence group of companies manages total assets of more than $1.2 billion for over 18,000 investors.
For The Six Months Ended 30 November 2007
31 May 2007 30 November 2007 30 November 2006
12 months 6 months 6 months
Revenue $23.11m $10.46m
$30.74m Net Operating Surplus Before Taxation $13.69m2 $1.39m1
$21.92m Net Surplus $11.43m2 $2.21m1
$311.54m Total Assets $317.62m $266.14m
$169.27m Total Unit Holders Funds/Unit Holder Liability $184.33m $145.69m
128.63m Units on Issue 189.39m 123.81m
90.2 Net Tangible Assets per unit (cents) diluted 98.2 79.7
31.34% Secured Bank Debt to Assets 37.46% 31.32%
41.23% Total Debt to Assets 37.46% 43.62%
5.505 Distribution Cents per Unit 2.4 2.5
As a result of NZ IFRS adjustments and
subsequent amendments to NPT’s Trust Deed, Net Surplus
before and after tax were calculated on a different basis
and therefore are incomparable. In order to provide a like
for like comparison, below is a re-worked summary of
21.56m Net Operating Income 11.59m 10.08m
11.93m Operating Expenses excluding manager’s performance fee 7.14m 6.05m
9.63m Operating Surplus 4.45m 4.03m
(0.46m) Add other Non Cash items and non cash IFRS adjustments 0.19m 0.02m
(2.35m) Less distribution to Convertible Preference Unit Holders (0.68m) (0.96m)
6,82m Distributable Surplus 3.96m 3,09m
1. After deducting $3.016m
distribution to unit holders and no fair value adjustment
for investment properties for the six months to 30 November
2. Includes fair value adjustment for investment properties for the six months to 30 November 2007.