DNZ Interim Results for the Six Month Period to 30 September 2010

DNZ Interim Results for the Six Month Period to 30 September 2010

DNZ Interim Results for the Six Month Period to 30 September 2010 11/11/2010

The Board and Management of DNZ are pleased to announce a very positive six months ended 30 September 2010.

 

Highlights:
  • Successful IPO and capital raise of $45 million
  • NZX listing on 16 August 2010
  • Positive share price growth
  • September quarter cash dividend of 2.0 cents in line with previous guidance
  • Completion of the asset sales programme
  • Solid portfolio performance
    • 105 lease transactions completed
    • WALT of 4.4 years
    • Occupancy at 96%
  • Only internally managed listed property entity

Financial Performance

DNZ has delivered a sound operating performance over the period recording a result that is consistent with guidance provided in the Investment Statement and Prospectus published in July 2010.

On 1 July 2010, DNZ Property Fund Limited became a Listed PIE and from that date accounts for current and deferred tax. Total deferred tax charged to the statement of comprehensive income is $86.3m including $69.5m relating to deferred taxation on buildings that will not be payable as the investment properties are held on capital account. Effective from 1 July 2010, the Group terminated the external Management Agreement in return for a termination payment of $32.0m (inclusive of the purchase of fixed assets of $0.2m) of which $31.8 has been charged to the statement of comprehensive income. As a result of these items outlined above the Company recorded an overall net loss of $112.8m for the period.

Distributable profit for the six months to 30 September 2010 was $9.8m.

Share Price

Since issuing shares to investors at $0.97 as part of the NZX listing on 16 August 2010, DNZ’s share price has appreciated to $1.20 as at close on 10 November 2010.

Dividends

Consistent with guidance provided, the Board is pleased to have approved a second quarter cash dividend of 2.0 cents per share. This dividend will carry imputation credits of 0.231 cents per share. The record date for this dividend is 26 November 2010, with payment to shareholders to be made on 10 December 2010.

Capital Management

DNZ has maintained a strong balance sheet position over the last six months through a series of prudent capital management initiatives that have included:

  • $45 million capital raise
  • Negotiating the renewal of debt facilities to 30 September 2013
  • $150m of swaps entered into during the period (including $40m forward swap starting February 2011)
  • Completion of the asset sales programme
  • The asset sales programme has realised $31.3 million (gross) during the period with an additional $39.7 (gross) million of sales contracted unconditionally with settlement in the 2011 and 2012 financial years. These sales have been at or close to valuations despite the difficult market conditions. The net proceeds from the sales have been utilised to repay bank debt with DNZ’s Loan to Value Ratio (LVR) reduced to 43.9% as at 30 September 2010. Following completion of settlements this is expected to reduce further.

    Portfolio Valuation

    The Board of Directors has reviewed the fair value of the investment properties as at 30 September 2010 on an asset by asset basis and is satisfied that there has been no significant change to the overall carrying value, other than three assets that were subject to independent valuations due to significant capital expenditure works undertaken in the current period.

    Lease Transactions

    Key components of achieving rental income growth in the portfolio are lease renewals and rental reviews. DNZ currently has a target of having 25% of the portfolio’s rental reviews being fixed or having a stepped increase at a review date, or being linked to an increase in inflation based on movements in CPI.

    For the six month period to 30 September 2010 management completed 105 lease transactions made up of the following:

  • 53 rent reviews over 109,013m² for a total rental of $18.1 million
  • Of the remaining 55 rent reviews to be concluded prior to 31 March 2011, 24 are CPI based, 28 are market reviews and three are stepped increases
  • 18 lease renewals completed over 7,558m² for a total rental of $1.5 million
  • 34 new lettings completed over 18,018m² for a total rental of $2.9 million.
  • Fletcher Building Laminex Group Design Build

    The new 12,000m² warehouse and 1,800m² office building are nearing completion on 2.89 hectares of the O’Rorke Road site in Penrose. Practical completion is on schedule for 19 November 2010, with the new 12 year lease commencing on that date. The management team is reviewing various design/build opportunities for the residual 2.28 hectares of the site.

    Summary

    The key benefits and drivers of listing were to provide liquidity and an improved share price for our shareholders. The Board and Management believe DNZ has positioned itself strongly to achieve this. Further dividend payments for the current financial year are scheduled to be distributed to shareholders in March 2011 and June 2011.

    The primary focus of the Management team has been, and is to maintain the Company’s occupancy levels and rental streams through engaging with, managing and retaining tenants through proactive management. As the only listed property entity with an internal management team, DNZ’s sole aim is to deliver strong and sustainable returns to its shareholders.
     


     
    Attachments provided to NZX:
    1. NZX Appendix 1
    2. Interim Results Briefing
    3. Interim Financial Statements

    Downloads




    For Further Information Please Contact:
    Paul Duffy, CEO, DNZ Property Fund Limited
    Phone: 09 912 2690 – Mobile: 021 843 758 – Email: paul.duffy@dnzproperty.com

    DNZ Property Fund Overview
    DNZ Property Fund Limited owns one of New Zealand’s largest diversified investment property portfolios with commercial office, retail and industrial properties located in Whangarei, Auckland, Tauranga, Hamilton, Rotorua, Palmerston North, Napier, Wellington, Nelson, Christchurch and Dunedin.

    As at 30 September 2010 DNZ Property Fund owned 54 properties with 279 tenants, a weighted average lease term (WALT) of 4.4 years, an occupancy rate of 96.1% over a net lettable area of 379,934m², net contract rental of $55.7m with a portfolio value of $669.6m (Latest Valuations).
    DNZ Property Fund Limited is a Portfolio Investment Entity in which investors hold shares and is managed by its own internalised management team. DNZ Property Fund Limited also manages the property portfolio of Diversified NZ Property Fund Limited, which is owned by Australian institutional investors.

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