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DNZ Property Fund [NZX: DNZ], the sixth-biggest property stock on the NZX 50 Index by market capitalisation, posted an 8.7 percent drop in annual profit after writing down the value of development work on its Johnsonville Retail shopping centre in Wellington and a new office building in Albany, Auckland.
Net profit fell to $41.6 million, or 14.47 cents a share, in the year ended March 31, from $45.5 million, or 18.25 cents, a year earlier, the Auckland-based company said in a statement. Net rental income rose 7.2 percent to $57.4 million while corporate expenses increased 14 percent to $9 million.
Chief executive Peter Alexander, who joined the company in December, is aiming to restructure the property investor to boost returns. In the past year, earnings were crimped by a $3.2 million write down of the fund's Johnsonville shopping centre as a delay in construction pushed costs up beyond what the finished project would be worth. It also recognised a $188,000 write down on the development of a new office building in Albany and booked a $1.3 million loss on the sale of investment properties in Wellington and Christchurch, wider than the $467,000 loss on disposal of properties it posted in the previous year.
Shares in DNZ fell 0.3 percent to $1.595 and have declined 6.7 percent the past year.
In the 2014 financial year, the total value of the fund's properties increased by $18.7 million to $780.2 million with occupancy levels remaining above 99 percent with a weighted average lease term of 5.5 years.
DNZ will pay a fourth-quarter dividend of 2.25 cents a share on June 20, taking total dividends for the year to 9 cents. The fund said it expects dividends to at least be maintained at the current 9 cent annual level even as it funds the development of its Westgate shopping centre north of Auckland.
The fund began construction on the Westgate mall last month and said it has agreements to lease 45 percent of the space, with the opening slated for October 2015.The mall is expected to cost just over $155 million and be worth $160 million on completion. The board has made an exception to its principle of not having more than 15 percent of the value of its property portfolio under development at any one time, with the measure forecast to peak at under 25 percent during the project.