Stride Property Group, which spun out its retail portfolio into a separately listed vehicle last year, posted a 44 per cent gain in first-half profit as growth in management fees and lower costs made up for a decline in rental income.
Net profit rose to $33.3 million in the six months ended September 30, from $23.2 million a year earlier, the Auckland-based company said in a statement. Net rental income fell to $28.7 million from $29 million while management fee income rose to about $6.5 million from $2.3 million.
Stride trades as a stapled security on the NZX, comprising one share of Stride Property, which owns a portfolio of property, and one share of Stride Investment Management Ltd (SIML), which manages three portfolios including Stride's and those owned by Investore Property, the retail property investor spun out into a separately listed vehicle in July 2016.
Stride retained 19.9 percent of Investore and the close relationship was illustrated this week by the announcement that Stride has sold three Bunnings stores to Investore for $78.5 million after renegotiating the terms of the leases.
That deal is subject to approval by Investore shareholders.
Yesterday, Investore said its first-half profit more than tripled to $11.6 million as acquisitions boosted rental income and it benefited from lower finance costs, while Stride separately announced a $43 million redevelopment to secure a 25-year lease with Waste Management NZ.
Corporate expenses fell to $6.2 million in the first half from $9.1 million a year earlier, which included one-time costs of $3.1 million.
The group oversaw some $2.1 billion of owned and managed properties as at Sept. 30, including Stride's own portfolio of 29 properties valued at $919 million, Investore's 39 properties valued at $663 million and four properties valued at $523 million from its Diversified NZ Property Trust.
The property portfolio rose a net 1.7 percent, it said. The weighted average lease term (WALT) was 4.9 years.
A breakdown of its management fee income shows it included $1.8 million from Investore in the first half. It also got a $1.69 million management fee and a $1.03 million building management fee from the diversified trust.
"While the previous financial year was one of transformation, the first half of 2018 was most notable for growth in the group's real estate investment management business," chair Tim Storey and chief executive Philip Littlewood said in the interim report.
Investment management services accounted for 23 percent of group revenue in the first half and that part of the business was expected to continue growing, they said.
The first-half result was in line with company forecasts and the company expects to pay a combined cash dividend of 9.91 cents per share in the full year, they said.
Stride's stapled securities last traded at $1.68 and have slipped about 3.4 percent since the time Investore was spun off. Investore last traded at $1.39 and has fallen about 14 percent in that time.
Stride was previously known as DNZ Property Fund and changed its name in September 2015.