By Bob Dey
Newmarket Property Trust has surfaced with a leap in profit and a proposal to institute surprising and positive plans for earnings growth, six months after a merger scheme was ambushed by a small group of investors.
The trust yesterday reported net profit after tax of $7.4 million for the
year to June. This compared with a $6.2 million loss last year, largely the result of a valuation error being rectified and a separate revaluation.
Importantly for unitholders concerned about what will happen after a yield guarantee expires, directors have forecast a 7.5 per cent yield for the June 2001 year.
The Auckland-based trust had one property, Rialto Heart of Broadway, going into the merger with Dunedin-based National Property Trust in March. But it came out of the failed merger also owning most of the AA Centre in central Auckland.
When the Rialto was being developed, Newmarket was also refurbishing the old George Court department store building on Karangahape Rd for strata-titling and resale. The trust depended heavily on a guarantee from original unitholder FAI Metlife to maintain promised returns.
The guarantee, now held by Sovereign, continues until next June.
Newmarket chairman Jock Irvine said yesterday the latest Rialto performance showed the trust needed to rely far less on the guarantee.
Rialto's retailers increased sales by 19 per cent to $25.4 million and the trust increased its rental income by 25 per cent to $6.5 million.
The rental guarantee top-up was cut from $2 million to $1.76 million and the yield guarantee top-up was cut from $3.4 million to $1.14 million. The trust also cut its operating costs by 16 per cent to $2.8 million and its interest bill 35 per cent to $1 million.
Directors are forecasting a yield around 7c a unit this year, topped up for the last time to 9.5c, and a 7.5c yield in the June 2001 year.
Mr Irvine said the trust plans an extraordinary meeting, probably in November, for unitholders to consider trust deed changes to require an annual meeting and an annual vote to reappoint directors.
Because listed trusts generally have contract management, and directors are actually directors of the manager, their accountability has been to the manager, not to the trust.
Mr Irvine said the trust also wanted to set out its investment strategy clearly and change to a fee structure based on yield and unit price growth.
By Bob Dey
Newmarket Property Trust has surfaced with a leap in profit and a proposal to institute surprising and positive plans for earnings growth, six months after a merger scheme was ambushed by a small group of investors.
The trust yesterday reported net profit after tax of $7.4 million for the
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