The Kiwi Property Group, developer of the high profile Sylvia Park Shopping Centre in Auckland, has reported an after-tax profit of $250.8 million for the year ending March 31, up from the previous year’s $115.2 million, driven by a strong operating performance and a significant rise in the value of the property portfolio.
The company’s ‘funds from operations’ for the financial year were $91.1 million, up $6.3 million (7.4 per cent) from last year.
“We have this year seen the benefit of our long-term strategic initiatives, with asset values rising on the back of rental growth, leasing success and development activities, combined with improved market conditions,” saidCEO, Chris Gudgeon.
At year end, the value of the property portfolio rose to a record $2.67 billion, up $394.1 million from the previous year. The increase reflects the acquisition of Westgate Lifestyle and other capital expenditure, together with a $175.9 million revaluation gain. Shareholders’ funds have risen by $334.2 million (24.2 per cent) to $1.72 billion and net asset backing per share (NTA) has increased by 10.7 per cent to $1.34, assisted by the fair value gain on our investment properties.
Company chair, Mark Ford, confirmed shareholders will receive a final cash dividend of 3.30 cents per share, taking the full-year cash dividend to 6.60 cents per share, in line with guidance and up from 6.50 cents per share in the prior year.
Kiwi Property also continued its capital recycling programme for non-core assets. A conditional agreement to sell Centre Place – South, in Hamilton, has been secured for $46.7 million, which is due to settle in June 2016. At year end, the company’s portfolio retail sales have shown encouraging growth with discretionary spending improving over the course of 2015. Portfolio retail sales grew by 5.8 per cent to $1.36 billion for the year to March 31, 2016, buoyed by improving household incomes, low mortgage rates, strong house prices and positive net migration. During the year, 861 new leases and rent reviews were completed over 211,000sqm of space, or 56 per cent of the portfolio, locking in 3.7 per cent rental income growth.
“We are continually refining the retail mix in our shopping centres, with emphasis in recent years on providing shoppers with greater diversity of food – including both indoor and outdoor dining options – as well as improving the availability of leisure and entertainment facilities,” Gudgeon said.
A great example of this, Gudgeon said, is the company’s highly successful dining lane and cinema development at LynnMall, known as ‘The Brickworks’ which opened in November 2015.
“Just one month after opening, retail sales across the whole centre for December 2015 were up 11.9 per cent from December 2014, with like-for-like specialty sales up by 5.2 per cent and foot traffic up 17 per cent. This trend has continued into 2016, with retail sales up on average 20 per cent across the four months since opening and foot traffic continuing to track 17 per cent above the level in the prior year,” he added.
Gudgeon said LynnMall has been a success for the company’s shareholders. Acquired in December 2010 for $174.5 million, this asset is now worth $269.0 million. He said after allowing for the further investment of $47.4 million made to improve the centre, the resulting value gain for shareholders has been $47.1 million.
Kiwi Property has also recently purchased half of The Base shopping centre, a subsidiary of Tainui Group Holdings Limited, at Te Rapa, Hamilton for $192.5 million.
Gudgeon also stated they will be expanding Sylvia Park Mall, adding up to 20,000sqm additional retail space on the second level where they plan to welcome one or more department stores, brands and concept stores and additional multi-deck carparks.
The potential cost for the expansion, planned to start in 2017, is seen at $180 million. Kiwi Property expects the expansion plan to be completed between 2019 and 2021. Kiwi Property projected an increased cash dividend for the 2017 financial year of 6.75 cents per share.
