Strong portfolio activity lifts PFI

PROPERTY For Industry lifted its dividend as strong portfolio activity drove higher revenue. Net profit jumped but largely due to a oneoff in the prior period.

The Aucklandbased company said net profit in the six months to June 30 was $29.6 million, or 5.93c a share, versus a loss of $5.6 million, or 1.25c, in the prior year.

It noted, however, the prior year’s loss was largely due to the $42.9 million cost of buying out its management contract.

The reduction in management fees, however, contributed to a $2.9 million reduction in expenses although that was partially offset by a $1.6 million increase in administrative expenses incurred from January to June 2018 in lieu of management fees.

‘‘Significant portfolio activity and increased earnings and dividends are the headline news,’’ chairman Anthony Beverley said in a statement.

Over 58,000sq m, representing more than 8% of PFI’s existing portfolio by rent, was leased during the interim period to 11 new and existing tenants for an average increase in term of 61⁄2 years, PFI said.

Total income lifted 10% to $53.4 million with the fair gain on investment properties rising 33% to $7.95 million.

Its net rental income for the six months increased by $3.7 million or 10.5% to $39.3 million. Funds from operations rose 21% to $22.2 million while adjusted funds from operations were up 13% to $17.5 million.

The company’s distributable profit rose 9.6% to 4.23c per share, versus 3.86c per share in the first half of the previous year.

The company will pay a secondquarter final cash dividend of 1.80c per share, up from 1.75c per share in the prior year. The record date is August 22 and the payment date is August 31.

Looking ahead, PFI confirmed its guidance for a full year cash dividend totalling 7.55c per share, up 0.1c on the prior year.

‘‘We want to take this opportunity to reiterate the view we have expressed in recent times: that the PFI Board recognises the importance of a rewarding dividend yield for shareholders, but we are mindful of balancing the competing priorities of maintaining or gradually increasing cash dividends, whilst at the same time growing AFFO earnings to cover those dividends,’’ Mr Beverley said.

PFI’s portfolio is diversified across 93 properties and 146 tenants, with 98.1% occupancy and a weighted average lease term of 5.39 years, weighted towards Auckland industrial property.

It expects occupancy of around 100% to be reached by late 2018 to early 2019.

The book value of the portfolio was $1.24 billion on June 30 versus $1.21 billion on December 31.

PFI said it made no changes to its bank facilities during the first half of 2018 and is ‘‘considering options,’’ including a second senior secured bond issue to extend and diversify borrowings.

It has a gearing of 31.4%.

The shares last traded at $1.74 and have increased 3.6% so far this year. — BusinessDesk