Stride Property said full-year earnings rose 16 per cent as an expanding portfolio boosted rental income, and announced plans to spin out its real estate investment management business as a standalone entity.
Distributable profit, the favoured measure of property investors as it strips out unrealised movements in the value of their portfolio, rose to $37.1 million, or 11.22 cents per share, in the 12 months ended March 31 from $32.1 million, or 10.8 cents, a year earlier, Auckland-based Stride, formerly known as DNZ Property Fund, said in a statement.
Net rental income rose 21 per cent to $69.3 million as its portfolio grew to 59 properties worth $1.27 billion as at March 31 from 41 properties worth $872.4 million a year earlier.
"The growth of Stride's business during 2016 has provided an excellent platform for continued growth in earnings and profitability," chief executive Peter Alexander said. "The programme to reposition the portfolio will continue alongside careful capital management to ensure that market opportunities can be realised when they occur."
Stride changed its name in September last year as it restructured its property holdings, raising money to buy 19 Countdown supermarket sites and selling other properties to fund the NorthWest Shopping Centre development in Auckland.
More recently, the Diversified NZ Property Fund which is managed by Stride, agreed to buy two Westfield malls.
The property investor today announced plans to split its property-owning business from its real estate investment management business where Stride would retain the property investment portfolio and a new entity would manage the Stride properties and other property portfolios.
The transaction needs shareholder approval at a special meeting, and would see shares in the investment manager distributed to Stride investors on a one-for-one basis to create what's called a stapled structure, similar to that used by some Australian real estate companies.
"This structure ensures Stride is 'fit for purpose', permitting Stride to grow its real estate management business whilst retaining its portfolio investment entity (PIE) taxation status," chairman Tim Storey said in the annual report. "The board expects to provide shareholders more information on this proposal before the end of June."
Stride Property CEO Peter Alexander said the company will continue to be internally managed and there's no intention to change this.
"Our aim is to drive growth and dividends for our shareholders. The stapled structure allows us to grow the Real Estate Investment Management business (Stride Investment Management Limited - SIML) while maintaining PIE status for the Property Investment business (Stride Property)," Alexander said in a statement.
"The stapled structure is listed as one security which means shareholders will remain investors in both SIML and Stride Property, allowing them to benefit from our growth."
The board declared a fourth-quarter dividend of 2.75 cents per share, payable on June 20 with a June 14 record date. That takes the annual payout to 10.75 cents, up from 10.25 cents in 2015.
Net profit climbed 34 percent to $92.4 million, including a $59.9 million gain in the value of investment properties.
The shares last traded at $2.21 and have increased 1.6 per cent so far this year.