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PFI lifts profits on low interest rates

NZ NewswireNZ Newswire 8/08/2016 Paul McBeth

Commercial property investor Property For Industry has lifted first-half earnings 17 per cent as lower interest rates help cut costs and lease reviews and new purchases lift rental income.

Distributable earnings, excluding management fees, rose to $17.6 million, or 3.92 cents per share in the six months ended June 30 from $15m, or 3.64 cents, a year earlier, the Auckland-based company says.

That was ahead of First NZ Capital's forecast for earnings of $16.5m, and PFI said it expected annual distributable profit of 7.7 cents per share, up from 7.4 cents in 2015. The company lifted operating revenue 9.7 per cent to $35.2m, while expenses fell 8.3 per cent to $14.1m.

"The first half of 2016 has delivered strong leasing outcomes. The company's results have also been assisted by the low interest rate environment," chairman Peter Masfen said.

"These conditions are expected to continue for the remainder of 2016."

The board declared a second-quarter dividend of 1.75 cents per share, taking total cash dividends for the six-month period to 3.5 cents. Despite the lift in earnings outlook, the board maintained guidance for annual dividends of 7.3 cents per share, "which would result in a more conservative dividend pay-out ratio than in the prior year."

The shares last traded at $1.66 and have increased 3.4 per cent so far this year, lagging behind the 14 per cent gain on the the S&P/NZX All Index over the same period.

PFI's 84 properties were valued at $1.01 billion as at June 30, up from $986.6m six months earlier, and with a shorter weighted average lease term of 4.87 years, compared to 5.18 years in the prior period. The occupancy rate was 99.5 percent, with about 1.4 per cent of contract rent due to expire before the end of the calendar year.

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