NPT announces six month profit of $4.971 million

NZX-listed property company NPT Limited today announced a pre-tax profit of $4.971 million for the six months to 30 September 2013.

NPT’s Managing Director Kerry Hitchcock says, "The pre-tax profit has decreased 46% from $9.1 million in the same period last year mainly due to a smaller uplift in fair value of its property portfolio.

Shareholders will receive a dividend of 0.80 cents per share for the quarter ended 30 September 2013. Imputation credits of 0.33 cents per share will be attached.

The Company’s trading profit for the six months ended was $2.737 million before abnormal expenses and unrealised adjustments, compared with $2.965 million in the same period in 2012; a decrease of 7.69%.

Mr Hitchcock says that the lower trading profit for the half year period is attributable to a decrease in rental income resulting from the sale of the Company’s building at 342 Lambton Quay and its Napier property Ocean Boulevard, an increase in Administration Expenses offset by savings in interest costs.

NPT’s property portfolio has increased in value 2.11 % to $118.8 million at 30 September 2013, up from $116.35 million at 31 March 2013. With the addition of the newly purchased Linwood Avenue properties which were settled on 30 September and valued at cost at $1.8 million, NPT’s total property portfolio stands at $120.6 million. The Company’s Weighted Average Lease Term (WALT) is 5.67 years as at 30 September 2013.

Mr Hitchcock says, "This six month period has seen a consolidation of the portfolio as the Company continues to enhance and develop its current properties, as well as rebalancing the portfolio with the focus on Auckland."

The Company’s Auckland commercial property, the AA Centre located in Albert Street, rose in value 4.72% to $33.3 million on 30 September 2013, up from $31.8 million at 31 March 2013. The increase reflects the new six year lease with AA Insurance, the refurbishing of the building’s foyer, the upgrade of the service lane adjacent to the Centre and the firming of the capitalisation rate.

NPT’s retail property, Eastgate Shopping Centre in Christchurch, has increased in value to $44.5 million in the six month period, up from $44.15 million on 31 March 2013; a rise of $350,000 (0.79%). The centre has had a busy six months as the Linwood Library & Service Centre establishes itself on Eastgate’s first floor. Retail tenants have very much enjoyed the benefits of the increased foot traffic the Library & Service Centre has brought to the centre - an average of 20,000 additional people per month have been through Eastgate’s doors.

Mr Hitchcock adds, "On 30 September we settled the purchase of two properties adjacent to Eastgate for $1.8 million. Situated at 279 and 283-285 Linwood Avenue, the sales transactions include provisions which will enable the Company to relocate the Linwood Avenue Medical Centre, currently located at 279 Linwood Avenue, into a purpose-built facility inside Eastgate itself. Having the Medical Centre at Eastgate, together with the Linwood Service Centre & Library will further help realise our objective in developing the Centre as a hub for the people of Christchurch."

The Heinz Wattie’s National Distribution Centre, located on the outskirts of Hastings, has risen to a value of $27.15 million, a rise of 0.56% ($150,000) over the six months, up from $27 million at 31 March 2013. One of New Zealand’s largest stand-alone warehouses with a floor area of 50,000m2, the Centre is leased to Heinz Wattie’s until 2027.

"The increased value of NPT’s Print Place property in Christchurch is a good result", says Mr Hitchcock. "Located in the Middleton area close to Christchurch’s southern motorway, Print Place has recorded a 3.36% ($450,000) rise in value to $13.85 million at 30 September, up from $13.4 million at 31 March 2013. Recent rent reviews have been favourable to the Company and, with the demand in Christchurch for quality industrial property, Print Place continues to be a very sound investment for our shareholders."

During the six month period, NPT sold its Christchurch property at 195 Hereford Street to the Crown as part of the Crown’s acquisition process for the establishment of the city’s new ‘Eastern Frame’. The net sale price was $3,500,500 plus GST. The sale took place on 6 June 2013.

This sale to the Crown followed settlement of the Company’s material damage insurance claim for significant earthquake damage to the property.

In late September NPT announced the purchase of The Roskill Centre in Mt Roskill, Auckland for $32.85 million. Funded by the Company’s debt facility at the Bank of New Zealand, the property settled on 16 October 2013, outside the reporting period.

The Roskill Centre is fully leased, with three major tenants - The Warehouse, ANZ Bank and Westpac - together with 17 specialty retail spaces and 335 car parks. Located in a strong growth area of Auckland, The Roskill Centre has excellent road and transport links. The leases have indexed rent reviews which will result in positive increases in cash flows over the terms of the leases. Settlement of this property in mid-October has had a positive effect on the Company’s Weighted Average Lease Term (WALT) which has increased to 6.17 years.

Mr Hitchcock concludes, "While the increase in the value of the property portfolio over the six month period has been modest, the Board is pleased with the progress that the Company is making in achieving its strategic goals. Our objectives to enhance and develop our current properties, together with rebalancing the portfolio towards Auckland with the purchase of The Roskill Centre are being fulfilled."

"Looking ahead, we will continue to add value and to seek further investments where the property type and scale fit the Company’s yield and growth requirements."

"NPT Limited is now better positioned for future growth and further acquisitions that will provide steady returns for shareholders."