DNZ beats earnings guidance, flags 8c dividend in 2012

The Meridian Energy building in Wellington is part of DNZ's property portfolio. Photo / Supplied

DNZ Property Fund, which has proposed a merger with rival Argosy Property Trust, beat its prospectus earnings guidance and has flagged a dividend payment of at least 8 cents a share next year.

The Auckland-based company made a distributable profit of $21.9 million, or 9.6 cents a share, in the 12 months ended March 31, beating its forecast $19.2 million, or 8.66 cents. Rental income was $800,000 short of forecast at $52 million. The occupancy rate was 98 per cent and a weighted average lease term 4.3 years.

Including changes in fair value, the cost of corporatisation, and bringing its management in-house, the company made a net loss of $35.1 million, beating the forecast loss of $106 million as it didn't need to account for as big a tax loss as expected. It booked an $11.5 million fall in the unrealised value of its investment property portfolio in the year.

"The primary focus of the management team will continue to be maintaining the company's occupancy levels and rental streams," chairman Tim Storey said in a statement. "We'll continue to engage with, manage and retain tenants through a proactive management focus that will continue to deliver strong and sustainable returns to shareholders.

The shares were unchanged at $1.31 in trading today, and have climbed 10 per cent this year. That granted chief executive Paul Duffy his third and final share incentive bonus earlier this month, giving him more than $3.5 million of stock since the company listed on the NZX in August last year.

The company's directors decided to amend its distribution policy to pay-out between 75 per cent and 80 per cent of distributable profit in light of DNZ's operating performance. The policy comes into effect from the 2012 financial year, and Storey said the board expects to pay a minimum of 8 cents a share for the year.

DNZ continued with its asset sale plan, raising gross $72.2 million in the period, which it used to pay down bank debt. With property assets worth $637.7 million, that left bank debt at $252.9 million, below the forecast $280 million in the company's prospectus.

The property investor is pushing to merge with rival Argosy in a bid to increase scale, and is touting annual cost savings of as much as $5 million