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Property for Industry rents, profits fall after asset sales

Property for Industry rents, profits fall after property sales

Aug. 8 (BusinessDesk) - Property for Industry's (PFI) first-half rental income and distributable profit fell, reflecting property sales partly offset by revenue from recently completed developments and rental increases.

However, PFI, which is managed by AMP Capital Investors and is the only listed vehicle specialising in industrial property, saw its bottom line result turn to a $6.6 million profit from a $29 million net loss in the same six months a year earlier. The year-earlier loss reflected the impact of the government abolishing depreciation on buildings.

General manager Ross Blackmore said rentals fell 4.7% to $15.6 million in the six months ended June 30.

While property sales cut gearing to 30.4% and average debt to $108 million from $122 million a year earlier, the higher costs of PFI's new five-year debt facility meant interest costs were broadly the same at $4.1 million, Blackmore said.

Distributable profit fell 13.1% to $8 million, or 3.69 cents per unit compared with 4.29 cents in the previous first-half, although on a normalised basis it was down about 7%.

Directors have maintained the dividend with the second quarter payout on August 31 being 1.55 cents per share unit with 0.4366 imputation credits. That took the six-month payout to 3.1 cents with 0.7696 imputation credits.

Key industrial property market indicators are improving, Blackmore said. Valuer CB Richard Ellis shows industrial vacancy rates at 4.4% with prime industrial vacancies as low as 2.9%.

“Rental levels continue to improve, particularly for prime industrial property where some growth is resulting from a reduction in incentives,” he said.

“Well leased industrial property continues to sell, although at lower volumes because such investments are tightly-held by existing owners and acquisition opportunities are therefore scarce.”

PFI's vacancy rate on its 50-property portfolio (down four from a year earlier) valued at $350.8 million was 97.4% at June 30, reflecting the lease expiry over a 7,000 square metre warehouse in Mt Wellington.

PFI has sold its property at 11 Barnes St, Wellington including 6,751 square metres of non-income producing adjacent land to an owner-occupier for $7.35 million. The sale is subject to subdivision consent and settlement is expected in November.

PFI units last traded at $1.16, down two cents from Friday, putting PFI's market capitalisation at $245.9 million. The units had been trending higher since late last year when they troughed at $1.10. However, the units have been falling since peaking at $1.24 in mid-July.


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