Quarterly Portfolio Update – Fourth Quarter FY15

Quarterly Portfolio Update – Fourth Quarter FY15

DNZ Quarterly Portfolio Update – Fourth Quarter FY15 23/04/2015

 

DNZ Portfolio Value Increase of $38.7 million or 5.1%

 

This announcement is to update the market on DNZ Property Fund Limited’s (‘DNZ’) transactional activity and property portfolio statistics for the fourth quarter, being 1 January 2015 to 31 March 2015. The annual independent market valuation of DNZ’s property portfolio as at 31 March 2015 is also included.

Portfolio Overview
as at 31 March 2014as at 31 March 2015
Properties4641
Tenants292281
Net Lettable Area (m²)364,916334,694
Net Contract Rental(1) ($ millions)61.258.5
Weighted Average Lease Term (years)5.55.1
Occupancy Rate (% by area)99.596.6
Portfolio Value(2) ($millions)780.2872.4

Lease Transactions
34 lease transactions were completed during the quarter, which included:
• 17 rent reviews over 17,059m2 for a total annual rental of $4.1 million
• 11 lease renewals over 7,881m2 for a total annual rental of $1.9 million
• 6 new lettings completed over 1,444m2 for a total annual rental of $0.4 million

DNZ Portfolio Valuation 5.1% Increase
DNZ has completed the annual independent market valuation of its property portfolio, with the portfolio value increasing by a net $38.7 million or 5.1% for the 12 month period on a like for like basis3. As at 31 March 2015, DNZ’s portfolio value is now independently valued at $872.4 million with a weighted average capitalisation rate across the portfolio of 7.73%.

The market valuations have been completed by independent valuers, are subject to final audit, and will be confirmed in DNZ’s financial results for the year ended 31 March 2015. These will be announced on 21 May 2015.

Peter Alexander said “The DNZ net portfolio valuation increase was predominantly driven by DNZ’s Auckland portfolio, which rose in value by $32.8 million (7.2%).”

The office and retail portfolio in Auckland contributed to most of the overall growth in the Auckland region with net valuation gains of $8.0 million (6.8%) and $9.1 million (8.3%) respectively.

In addition, NorthWest Shopping Centre (classified as development) increased by a net $7.4 million after capital expenditure of $69 million during the year. The assessed valuation on completion is now $170 million, and assumes a market capitalisation rate of 7.00%.

Mr Alexander added, “NorthWest is on track; all of the internal retail space is leased, including all specialty stores, kiosks and both anchors. We are now working to close the last seven tenancies on the main street (total 1,250 m2) and nine offices (total 2,000 m2). These are progressing well and it is anticipated that the project will exceed the 7.75% net operating income yield on development cost on completion of all leasing, as was forecast when the project was announced.

“Market capitalisation rate compression, particularly in the industrial sector, and an increase in assessed market rentals also resulted in favourable valuation increases across the portfolio.

“The Wellington portfolio and the remainder of DNZ’s regional portfolio also had positive valuation movements of $2.2 million (1.6%) and $3.8 million (2.3%) respectively,” concluded Mr Alexander.

Following the revaluation of the portfolio, DNZ’s bank Loan to Value Ratio (LVR) was 35.1% as at 31 March 2015.

1. Net Contract Rental is the amount of rent payable by each tenant, plus other amounts payable to DNZ by that tenant under the terms of the relevant lease as at 31 March 2015, annualised for the 12 month period on the basis of the occupancy level for the relevant property as at 31 March 2015, and assuming no default by the tenant.
2.The market valuations have been completed by independent valuers as at 31 March 2015, are subject to final audit and will be confirmed in DNZ Property Fund Limited’s financial statements for the year ending 31 March 2015.
3.The valuations of all properties disposed of during the 12 months from 1 April 2014 have been disregarded in this calculation. As at 31 March 2014, the portfolio was independently valued at $780.2 million.

 


For Further Information Please Contact:
Tim Storey, Chairman, DNZ Property Fund Limited
Mobile: 021 633 089 – Email: tim.storey@dnzproperty.com

Peter Alexander, Chief Executive Officer, DNZ Property Fund Limited
DDI: 09 913 1154 – Mobile: 0275 443 678 – Email: peter.alexander@dnzproperty.com

Jennifer Whooley, Chief Financial Officer, DNZ Property Fund Limited
DDI: 09 913 1150 – Mobile: 021 536 406 – Email: jennifer.whooley@dnzproperty.com

DNZ Property Fund Overview
DNZ Property Fund Limited owns one of New Zealand’s largest diversified investment property portfolios with $872.4 million (as at 31 March 2015 (subject to final audit)) of commercial office, retail and industrial properties located in the main urban areas throughout New Zealand. As at 31 March 2015, DNZ Property Fund owned 41 properties with 281 tenants, a weighted average lease term (WALT) of 5.1 years and an occupancy rate of 96.6% over a net lettable area of 334,694m².

DNZ Property Fund Limited is a Portfolio Investment Entity in which investors hold shares and is managed by its own internal management team. DNZ is also the manager of Diversified NZ Property Fund Limited, a $115.9 million (as at 31 March 2014) commercial property fund.

DNZ’s top 10 tenants as at 31 March 2015: Bunnings, Progressive Enterprises (Countdown), Foodstuffs (PAK’nSAVE & New World), ASB, NZ Government, Fletcher Building, The Warehouse, Westpac, Meridian and Lion. These 10 tenants represent 52% of the Company’s total contract rental.

DNZ Increases Dividend Guidance
DNZ Sells Office Property in Auckland