Precinct first-half operating income falls 1.5% as costs rise

Precinct Properties New Zealand, formerly known as AMP NZ Office, posted a 1.5 percent decline in first-half net operating income as costs rose and occupancy fell.

It lifted its first-half dividend for the first time since 2008, with a cash dividend of 2.56 cents per share, up 1.6% from the previous period. 

Operating profit, which excludes some non-cash items and is used as the basis of dividend policy, was $26.2 million in the six months ended December 31 from $26.6 million a year earlier, the Auckland-based company says in a statement. Gross rental income rose 6.8 percent to $68.9 million. Net profit rose to $23.6 million from $20.4 million.

The shares fell 1.4 percent to $1.025. Operating profit about matched a forecast from brokerage Forsyth Barr, while the dividend increase, to 2.56 cents from 2.5 cents was a tad below the forecast 2.6 cents. Precinct kept its full-year operating earnings forecast unchanged at 5.8 cents a share, before performance fees.

The increase in rental income came from Precinct's Bowen Campus and Downtown Shopping Centre properties the leasing at Zurich House which is now at 100 percent, the company says.

Property expenses rose about 11 percent to $21.3 million, reflecting the company's enlarged portfolio and higher costs for insurance and council rates. Interest costs climbed 16 percent to $12.1 million, reflecting acquisitions and the redevelopment of Auckland's ANZ Centre.

Administrative expenses rose 9.8 percent on higher management and performance fees.

Precinct's gearing rose to 33.5 percent as at December 31 from 27 percent six months earlier, largely reflecting the acquisition of the Downtown Shopping Centre and ANZ Centre redevelopment, it says.

The company's weighted average lease term, or WALT, slipped to 5.5 years from 5.9 years six months earlier.


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