Stride Property Group posted a 20 per cent drop in annual profit due to a smaller property revaluation gain. It expects to pay a flat dividend for another year as it continues with a new strategy of managing other people's properties as well as directly owning real estate.
Net profit fell to $76.2 million in the 12 months ended March 31 from $95.3 million a year earlier. The decline was due largely to a smaller revaluation gain on its investment properties of $36.5 million, compared to a $48.3 million increase a year earlier.
Distributable profit, which the firm bases its dividends on, was flat at $38.8 million, and asset sales in the prior year led to a 3 per cent decline in net rental income of $57.3 million.
The board declared a final dividend of 2.48 cents per share, payable on June 21 with a record date of June 14.
That takes the annual return to 9.91 cents, unchanged from 2018, and the board expects to pay the same amount in the March 2020 year.
"Stride has been focused on the future during FY19, undertaking a number of transactions that will establish the foundations for future growth, while ensuring stable and profitable returns to shareholders for the financial year ended 31 March 2019," it said in a statement.
Stride embarked on the new strategy in 2016, carving out its large format retail properties into a separately listed vehicle - Investore Property - in which it retained a 19.9 per cent stake and which it manages for a fee. It also manages a $485 million property portfolio for the Diversified Property Trust.
Investore last week reported a 16 per cent decline in annual profit, also on smaller valuation gains, and while it lifted its dividend for this year, it also signalled a flat return to shareholders for 2020. Investore's portfolio was valued at $761 million.
Stride shares last traded at $2.12, and have gained 9.8 per cent so far this year, lagging behind a 15 per cent increase for the S&P/NZX 50 Index. Investore shares were last at $1.74 and are up 14 per cent in the year to date.
Stride today said it's focused on expanding Investore and Diversified, and wants to set up a group of commercial property funds to grow its management business. It's also investigating options in markets adjacent to core commercial property.
"We consider that SPL (Stride Property Ltd) has a portfolio of industrial and office properties with enduring demand, which are likely to form the basis of future products to be established by Stride," it said.
"We see our value proposition as identifying and managing properties with enduring demand and managing investment management products which deliver leading returns for our shareholders and investors, with SPL owning a share in each specific property sector product."
Stride's portfolio of 26 properties was valued at $966.3 million as at March 31, up from $902.2 million a year earlier. The current mix is 11 industrial sites, eight office buildings, three large format retail stores and four retail shopping centres. The weighted average lease term of 4.8 years was down from 5.1 years in March 2018, while the occupancy rate increased to 97.6 per cent from 96.7 per cent.