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Argosy lifts distributable earnings

NZN 24/05/2017 Rebecca Howard

Argosy Property's distributable earnings have grown 4.6 per cent as it continues to lift the quality of its portfolio through the divestment of lower quality, non-core assets.

Distributable profit, the preferred measure for property investors which strips out unrealised movements in the value of their portfolio, rose to $54.3 million, or 6.64c per share, in the 12 months ended March 31, from $51.2m, or 6.35 cents, a year earlier, the Auckland-based company said in a statement.

Net property income gained 1.2 per cent to $99.5m.

Argosy's occupancy rate eased to 98.6 per cent from 99.4 per cent but the weighted average lease term was 5.59 years versus 5.24 in the prior year.

Its portfolio is now valued at $1.44 billion across 64 properties.

Argosy's debt levels, excluding capitalised borrowing costs, were 36.3 per cent of total assets versus 36.7 per cent as at March 31, 2016.

"We continue to improve the quality of the portfolio which now presents to a very high standard and remain committed to providing our shareholders with sustainable and attractive returns in the years ahead," said chairman Mike Smith.

Argosy reiterated that its net property income got a boost from the surrender of the lease by New Zealand Post for the top three floors of the building in Wellington.

However, this was partially offset by the loss of rental income following the November 2016 earthquake that damaged the building services of the property and left some of the floors in the building unoccupied.

Independent engineers confirmed that the building remains structurally sound, but significant replacement of fit-out and services is required, it said.

While this loss of income is expected to be recovered from its insurers, the insurance claim has not yet been fully quantified, Argosy said.

Insurance proceeds are likely to be received in the 2018 financial year

Net profit rose 32.3 per cent to $104.4m, including a $42.3m revaluation gain.

The board declared a final quarter dividend of 1.525c per share, payable on June 29 with a June 15 record date.

That takes the annual payout to 6.1 cents, up 1.2 per cent on the year.

It expects to pay dividends totalling 6.2c in the 2018 year.

The shares last traded at $1 and have fallen 10 per cent over the past year.

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