Argosy outlook lifts after $26.7m profit

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

Argosy Property Trust, with real estate worth $961 million, has turned around its bottom-line result and predicts a brighter outlook.

The listed landlord, being chased by smaller rival DNZ Property Fund in a hostile takeover, converted last year's $59.1 million after-tax net loss into a $26.7 million profit for the year to this March 31.

That was thanks mainly to last year's $82.8 million property devaluations, taken into the bottom line. This year, Argosy recorded a $2.1 million revaluation gain which transformed its net after-tax figure.

Shane Solly of Mint Asset Management praised the result.

"This is evidence of an improving trend. Management is continuing to make good progress in cleaning up the portfolio," he said, and the trust had indicated a more sustainable dividend payout. "Debt levels remain relatively high but management have strategies to reduce it over time."

Michael Smith, chairman of the manager, said the worst of the financial crisis was behind the business.

Argosy, formerly ING Property Trust, is facing a $32.5 million management internalisation proposal, yet to be voted on by unit-holders.

The domestic economy was more positive this year, the trust said in an outlook for the year ahead.

"It is clear that a recovery will be gradual and it is probable that there will continue to be challenges ahead.

"We expect the market to be relatively stable in the coming year with a modest level of rental growth evident by year end in the industrial and retail sectors," the managers said.

By balance date, the trust's assets stood at $975.2 million and the trust had borrowed $412.4 million, giving a debt-to-asset ratio of 42.3 per cent, below the trust's deed limit of 50 per cent.

The board projected a payout of 6c a unit for the 2012 financial year if the internalisation of the management was completed successfully.