Property For Industry, New Zealand's only listed company specialising in industrial property, expects to pay more of its earnings in dividends in the coming year after its dividend payout ratio declined last year.
The Auckland-based company expects its distributable profit to fall about 2.4 percent to 7.35 cents per share in the year ending Dec. 31, while its dividend per share is forecast to rise 0.7 percent to 7.3 cps, it said in a statement. In 2014, distributable profit rose 3.7 percent to 7.53 cps while the annual dividend increased 0.7 percent to 7.25 cps, it said.
The property investor's forecast for lower earnings and a higher dividend means it is set to pay out more of its profits to shareholders in the current 2015 financial year after its dividend payout ratio dropped to 96 percent of earnings in 2014 from 99 percent in 2013.
"We look more at the bottom line to dividends per share as opposed to earnings per share, earnings per share is relatively flat, dividends per share we expect to go up slightly so there is a higher return for shareholders," joint general manager Nick Cobham said. "Our focus is really to say that dividends per share is slightly increased and it's really on our payout ratios, that's where the difference is coming through."
He didn't explain why the company's earnings may be lower.
Property For Industry posted a 48 percent increase in net profit to $59.9 million in the year ended Dec. 31 as it marked its first full financial year since merging with Direct Property Fund. Revenue rose 33 percent to $63.8 million while expenses increased 27 percent to $26.9 million, it said.
The company's properties increased in value by $36.3 million during the year, partly offset by a $2.1 million loss on the disposal of properties and a $6.4 million loss on derivative financial instruments.
During the year, the company sold five non-core properties for a gross $26.6 million, with $19 million reinvested in a new warehouse at Seaview, Wellington and a development at Manukau in Auckland, and a further $10 million set aside for a bulk storage warehouse development in Mount Maunganui.
Property For Industry said leasing demand in 2014 was "solid", with its occupancy rate rising to 98.5 percent from 97.1 percent the year earlier.
"The opportunity to acquire prime industrial property accretive to shareholder returns looks a continuing challenge in 2015 given the dearth of investment grade property available
and the competition to acquire, particularly from private investors and owner occupiers," Cobham said. "We continue to review our portfolio and seek to take advantage of the buoyancy in the market to recycle capital out of non-core assets, reposition existing properties and undertake development on expansion land within the portfolio when an accretive opportunity
presents."
Shares in Property For Industry last changed hands at $1.62, and have gained 6.9 percent so far this year. The stock is rated a 'sell' according to the consensus of five analyst recommendations compiled by Reuters.