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DNZ portfolio's value steady, occupancy & lease terms rise

BUSINESSDESK: DNZ Property Fund portfolio's value is steady and it has increased both its occupancy rate and weighted average lease term (WALT) in the past year, the company said.

The fund's occupancy rate was 98.7% as at March 31, up from 97.9% a year earlier.

Its WALT rose to 5.4 years from 4.3 years and, on a like-for-like basis, the portfolio's value rose 1%, or $800,000, it said.

The portfolio was valued at $658.3 million as at March 31.

The size of the portfolio increased by one to 51 properties with the acquisition of the Bunnings warehouse in Mt Roskill, Auckland, making the hardware chain DNZ's largest tenant.

The $24.5m Bunnings transaction, settled in early March, “is also a reflection of the management team's continuous focus on improvement of tenant quality and, by natural extension, the quality of the assets within the DNZ portfolio”, chief executive Paul Duffy said.

DNZ's top 10 tenants, which include the government, Fletcher Building and the Countdown, Pak n Save and New World supermarkets, account for 52% of its total contracted rentals, he said.

Activity in the March quarter included eight rent reviews for a total annual rental of $900,000, eight lease renewals for a total annual rental of $2.2m, including an eight-year extension to the Palmers, Napier, lease and a two-year extension of Westpac's lease in Grey St, Wellington, and eight new lettings for total annual rental of $500,000.

DNZ's loan-to-valuation ration stood at 40.6% as at March 31, comfortably within the company's target and below its banking covenant limit of 50%.

DNZ shares fell 1.4% to $1.39 in early trading, down from their record $1.42 reached earlier this month and well up from August's low at $1.17.