KEY POINTS:
Payouts for investors in listed landlord National Property Trust will be cut next year because of rising interest rates.
National Property Trust issued a strong annual result yesterday and said it had a very healthy outlook.
Its real estate portfolio rose in value by $29.5 million to $298.7
million and its annual after-tax profit was up from $5 million to $6.7 million.
But investor payouts will drop next year, a move the trust blamed on the rising costs of borrowing money and servicing debt. The Reserve Bank has lifted the official cash rate by 100 basis points to 8.25 per cent.
Unit holders were told yesterday that their distributions would be pruned from this year's 5.5c a unit probably to 5c next year.
Investors would have some comfort from the new portfolio investment entity (PIE) regime due to come into force from October 1, the trust said.
John Crone, the trust's general manager, was upbeat about the result, saying firmer yields, higher market rents and better leasing terms had improved the outlook for the trust, which now owns properties worth $298.7 million.
The trust has properties in Auckland, Napier, Tauranga, Wellington and Christchurch. National Property's manager is owned by financier St Laurence.
Three properties showed the strongest value rises. The AA Building in Auckland booked a 26 per cent rise in value from $28.6 million last year to $36 million this year.
The value of the Baldwins Building in Wellington rose 16 per cent from $25 million to $29 million and Christchurch's Eastgate Shopping Centre rose in value 18 per cent, from $73 million to $87 million.
Vacancies are highest in Napier's Ocean Boulevard, a $6.5 million shopping centre with 27 tenants and a 26 per cent vacancy factor.
But Kevin Podmore, the trust's chairman, said the portfolio had a high overall tenant occupancy level which was helping National's financial performance.
"The main contributing factors include a reduction in vacant space across the portfolio, positive movements in valuations and the closing out of swap contracts which frees up the trust to follow its strategy of reducing debt," Podmore said.
The trust's gearing had dropped from 52 per cent last year to 42 per cent and further equity raising was being considered.
Overall, the trust's portfolio rose in value 11.8 per cent.
Crone said some development work was planned.
"The trust's main focus over the coming year will be to continue to improve and enhance the value of its existing portfolio through active asset management and selected development activity."
And it seems St Laurence's control of the trust's manager will be used for more financial leverage this year.
The trust's outlook said it would "utilise St Laurence group's purchasing power to reduce operating expenses and streamline operations".
The back entrance of National Property Trust's $50 million Rialto Centre in Newmarket is about to be renovated.
The centre's main entrance is off Broadway but its Osborne St frontage on a block behind will be given a spruce-up.
The trust said yesterday that it would create four new specialty shops there.
ON THE RISE
National Property Trust
Revenue
2007 - $20.3m
2006 - $18.4m
Before-tax profit
2007 - $7.4m
2006 - $3.9m
Net profit
2007 - $6.7m
2006 - $5m
