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Precinct Properties New Zealand [NZX: PCT], formerly known as AMP NZ Office, said annual earnings rose 9.4 percent as its Auckland rentals continued to strengthen and Wellington occupancy remained static.
Operating profit, which excludes some non-cash items and is used as the basis of dividend policy, increased to $63.8 million, or 6.10 cents per share, in the 12 months ended June 30, from $58.3 million, or 5.85 cents, a year earlier, the Auckland-based company said in a statement. That was in line with Forsyth Barr’s forecast profit of $63.8 million. Gross rental income rose 12 percent to $165.4 million.
"We are very pleased that the portfolio is close to being fully let, with continuing leasing success in Auckland and Wellington," chief executive Scott Pritchard said. "The previous 12 months have seen continued progress as the business was further positioned to execute on a strategy of improving portfolio quality, increased its weighting to Auckland and delivering a long term improved earnings outlook."
Precinct has been expanding its Auckland holdings, including entering into a development agreement for a commercial office at the new Wynyard Quarter.
Auckland vacancy in city office buildings is at a 20-year low, falling to 1.4 percent from 5.8 percent a year earlier, as New Zealand’s biggest city has benefited from strong population growth, translating to rental demand for businesses, Precinct said. Its Wellington portfolio was 98 percent occupied.
The property investor recognised a 5.5 percent, or $47.5 million, gain in its portfolio’s value taking it to $1.73 billion as at June 30, with Auckland valuations up 5.9 percent. Precinct's Wellington property portfolio's value fell 1.4 percent, with commercial properties in the capital under pressure in part due to the government's attempts to use its buying power to lower prices.
The company will pay a fourth-quarter dividend of 1.35 cents per share taking the 2014 full-year dividend to 5.40 cents, up from 5.12 cents in 2013. Precinct forecast a 2015 dividend of 5.4 cents per share, consistent with its 90 percent dividend policy.
Separately, the company said Robert Walker has resigned as the alternate director for Mohammed Al Nuaimi effective today, to be replaced by Anthony Bertoldi, following approval by the board.
Shares of Precinct fell 0.9 percent to $1.115, and have gained 9.2 percent in the past 12 months. The stock is rated an average of ‘hold’ according to three out of five analysts surveyed by Reuters, with a median target price of $1.09.