Stride Property Group's rental income rose but so too did its expenses which pushed annual profit down 14.8 per cent.
Net profit after tax from the diversified landlord fell from last year's $131.9m to $112.3m in the year to March 31, 2022. Rent rose from $50.7m to $65.8m after the business bought new office blocks in the 2021 and 2022 financial years.
But corporate expenses rose from last year's $21.1m to $27.4m at the business which last year abandoned spinoff float plans for its Fabric subsidiary.
Stride's assets include Westgate's NorthWest shopping centre and Wellington's waterfront Meridian Energy headquarters.
The company attributed lower profit partly to higher income tax expenses, up from $9.4m last year to $12.4m in the latest period.
It also today cited an $18.5m impairment to the carrying value of its investment in Investore Property, due partly to Investore's current share price.
"Stride remains confident in the value of Investore and its underlying portfolio of properties which remain in strong demand," today's statement said.
Stride had intended to float a new business, Fabric Property, but last August axed that and instead agreed to sell some of Fabric's office real estate.
Stride comprises Stride Property and Stride Investment Management but it also manages the separately listed large-format retail landlord Investore.
Assets Stride manages grew from $3 billion last year to $3.6b in the latest year, the company said today.
But there's a flip side to growth.
"This growth in assets under management has contributed to the growth in recurring base management fees earned by Stride Investment Management, up 18.7 per cent from FY21," the business said.
Last August, the company pulled out of plans for an initial public offering to float its office buildings off into a newly listed company and problems in China were cited.
Problems at Chinese mega-developer Evergrande were referred to by Stride chief executive Philip Littlewood on why the Fabric Property float was canned.
"What's happened is the international property and capital markets have become very volatile. In relation to Evergrande, that's an incredibly significant company and there's a perceived contagion associated with that and the knock-on for other property companies in Australia.
"We don't need to do anything right now, so on balance, we've decided to defer the offer and review it again when the market conditions are stable. We're in no rush" Littlewood said in August.
Last month, Stride announced its Fabric had struck a deal to sell Auckland B-grade office blocks to Mansons CGR: 25 and 35 Teed St, 7-9 Fanshawe St and 80 Greys Ave. That is an $84m deal but Fabric has to earthquake-strengthen the Teed St properties for $750,000.
Today, Stride said it had focused during FY22 on repositioning its office portfolio to meet changing market demands, buying 46 Sale St in Auckland and agreeing to buy the under-construction Newmarket office block by Mansons TCLM at 110 Carlton Gore Rd.
The Stride board said today it intends to pay a combined cash dividend for its 2023 full-year of 9.91 cents per share. That is the same for the 2021 and 2022 years.
Littlewood got $1.36m pay in the year. In addition, he got $615,000 in long-term share incentive rights which he said would be paid in three years if he achieved certain levels of performance and strategic goals.
Rent abatements to tenants in the 2021 year were $3.3m but $4.6m in the latest year. LIttlewood said that was up due to Auckland's 107-day lockdown last year.
Stride aims to have $4b of assets under management, Littlewood said today.
"By the end of the 2023 financial year, we'll have commitments to manage a further $250m of property. The remaining development pipeline will be delivered in 2024 which will take the value of the business in terms of assets under management to $4b," Littlewood said.
Stride was yesterday trading around $1.71, down 27 per cent annually. It has 540m shares on issue, giving it a market capitalisation of $923m.