Kiwi says it’s on an expansion drive
Kiwi Property, New Zealand’s biggest commercial and retail landlord, says it’s on an expansion drive after reporting a flat first-half profit.
New chief executive Clive Mackenzie, who has taken over from Chris Gudgeon to head the NZXlisted company, said $140 million of property development work was nearly completed.
A further $245m was being spent on work in progress to take the total to $385m, he said. “We’ve used the proceeds of sales to repay debt but also to fund expansion at Northlands and Sylvia Park [malls at Papanui and Mt Wellington].”
Around $10m to $20m is being spent on a seismic upgrade of LynnMall, he said.
Kiwi’s net profit for the six months to September 30 was $48.3m, up slightly on the previous corresponding period’s $47.9m.
Net rental income dropped from last year’s $95.1m to $89.9m. Gearing, at 29.4 per cent, was down slightly on last year’s 29.7 per cent.
Funds from operations dropped from last year’s $54.2m to $52.3m although Kiwi said that decrease reflected asset sales.
We’ve used the proceeds of sales to repay debt but also to fund expansion at Northlands and Sylvia Park [malls]. Clive Mckenzie, Kiwi Property CEO
Kiwi’s accounts noted vacancy at the Vero Centre and Countdown leaving as factors contributing towards falling rental income.
But interest and finance charges had also fallen, while “one-off” CEO transition costs raised employment and administration expenses.
Gavin Parker, chief operating officer, said Sylvia Park’s new $80m office block, a $21m upgrade at Northlands in Christchurch and development of a new $36m, fivelevel, 600-vehicle carpark at Sylvia Park were included in the $140m. The carpark is up between Zara and H&M.
The $245m work in progress figure included a galleria secondlevel at Sylvia Park, development of the Kmart there to replace the Countdown which shut and creation of a two-level Farmers, Parker said.
Mackenzie said 60 new shops would open at Sylvia Park in the middle of 2020 and that negotiations were under way with retailers.
Stuart Tabuteau, chief financial officer, said negotiations were also progressing on the sale of Centre Place North in Hamilton: “We have said we would be working through the ground lease which is not particularly favourable,” he said. Tainui Waikato interests own the ground, he said. The property is valued at about $60m.
Mackenzie said Kiwi had already signalled that property’s sale. “It’s early days and negotiations to sell it remains confidential.”
Kiwi’s portfolio stands at $3b, down from $3.1b in March and retail sales in its big mall network rose from $1.6b last year to $1.7b this year.
Sylvia Park, LynnMall, Westgate Lifestyle , Hamilton’s Centre Place and The Base, Palmerston North’s The Plaza and Papanui’s Northlands comprise Kiwi’s retail portfolio.
Kiwi’s interim report notes that it had sold non-core assets as part of its portfolio rebalancing programme.
Kiwi sold North City in Porirua to a private investor for $100m and office tower the Majestic Centre in Wellington for $123m.