Kiwi Property Group posted a 0.9 per cent increase in profit as asset sales trimmed its interest bill.
The Sylvia Park Mall owner posted a rise in net profit to $48.3 million in the six months ending September 30 compared to $47.9 million in the previous corresponding period due to an 18 per cent decline in interest costs of $18.4 million.
Funds from operations, the company’s measure of operating performance, fell 3.4 per cent to $52.3 million, from $54.2 million in the previous corresponding period, reflecting the loss of income following the sale of The Majestic Centre and North City.
The board declared a second quarter dividend of 3.475 cents per share and expects an annual payout of 6.95 cents, up from the 6.85 cents the previous year.
“Over the past several years, we have been actively rebalancing the composition of our property portfolio in favour of greater exposure to Auckland, the nation’s economic powerhouse,” Mark Ford, Kiwi Property Group chair, said.
“The sale of non-core assets to achieve this strategy has predictably resulted in lower rental revenue in the short term, but has placed us in an even stronger position to pursue growth opportunities for long-term benefit.”
According to Kiwi Property, the company continues to have an impressive occupancy ratio of 99.3 per cent, supported by a high quality tenant mix.
Clive Mackenzie, Kiwi Property CEO, said the group’s portfolio is strongly positioned with the rebalancing program almost complete.
“Our portfolio is valued at $3.0 billion and our portfolio weighting to our preferred market of Auckland now sits at 69 per cent,” Mackenzie said.
Kiwi Property’s occupancy was modestly impacted by the vacancies held in the Vero Centre to accommodate the company’s lease renewals with key anchor tenants, Russell McVeagh and Suncorp.
Mackenzie said for the balance of the 2019 financial year, the company will be focused on completing and advancing development projects underway at Sylvia Park and Northlands, and progressing zoning outcomes for their Drury landholdings.
The group’s Sylvia Park Mall is currently undergoing a NZ$220 million expansion which slated to be completed by mid-2020. The project will add 18,000sqm of retail space to the shopping centre, bringing it to a total of 90,000sqm.
