Investore Property Ltd increased its net asset base by 19% in the year to March, but reduced revaluation gains saw its profit slide by 26%.
In a release today, the NZX-listed large-format store owner said the year just finished was positive for the company.
It acquired, or agreed to acquire, 5 properties for a total $147.7 million, consistent with its strategy of targeted growth & acquisitions that enhance geographical &/or tenant portfolio diversification.
“Following settlement of the acquisition of the 3 properties from Stride Property Ltd on 30 April and after paying down debt using the net proceeds of the most recent capital-raising, Investore has $148 million of undrawn headroom available and a loan:value ratio of 30.4%, well within the board’s stated maximum of 48%. This positions Investore well to continue its strategy of growing its portfolio,” the company said.
Financial performance highlights:
Net rental income, up 1.4% to $48.1 million ($47.4 million)
Pretax profit, down 21.9% to $34.45 million ($44.1 million)
After-tax profit, down 25.8% to $28.6 million ($38.6 million), attributed primarily to lower revaluation movement
Revaluation gains, down 55.2% to $7.7 million ($17.2 million)
Total comprehensive income after tax, down 22.8% to $28.2 million ($36.5 million)
Basic & diluted earnings/share, down 29.6% to 10.4c (14.78c)
Total assets, up 2.2% to $786.6 million ($769.9 million)
Net assets, up 18.8% to $526.7 million ($443.2 million)
Cash dividend for year, unchanged at 7.6c/share
Weighted average least term, 10.4 years
Occupancy by area, 99.7%
40 rent reviews completed over 125,000m², resulting in a 4% increase to previous rentals
Portfolio market capitalisation rate, steady at 6.08% (including post- balance date acquisitions)
Dividend guidance for 2021, 7.6c/share, assuming no further deterioration in economic conditions due to Covid-19
Among recent portfolio changes:
- Land adjacent to existing Investore-owned Countdown Papakura acquired in March for $1.2 million, to enable expansion of carpark & improved customer access
- 3 large-format retail properties acquired from Stride Property Ltd for $140.75 million – Bunnings Mt Roskill, Mt Wellington Shopping Centre & Bay Central Shopping Centre in Tauranga – settled 30 April
- Bunnings intends to undertake up to $6 million of capital upgrade works for Bunnings Carr Rd (acquired in April) at Investore’s cost, including expanding the trade sales area, with associated improvements rental and a new 10-year lease to start on completion
- $35 million bank debt refinanced; post-balance date, a new $50 million, 5-year facility secured and $101 million of existing facility extended for 3 more years
- Loan:value ratio, down 11.4% to 30.4%, as if the capital-raise announced on 29 April had been completed and the acquisition of the 3 properties from Stride had settled
- Investore expects the impact of Covid-19 to cut its 2021 gross rent receivable by $1-2 million; rent deferrals to certain tenants will be structured to be repaid by 31 March 2021
- Portfolio valuations changed by between 0-7.5% from draft valuations received before the impact of Covid-19
Balanced against the reduced gross rent receivable for 2021, Investore said it would benefit from the reintroduced building depreciation deduction claims for property owners with commercial properties at a level of 2% of diminishing value/year, starting in April 2020. The company estimated it would provide it with a financial benefit of about $2.2 million for 2021.
1 May 2020: Investore placement fully subscribed
29 April 2020: Stride-Investore deal gets OIO approval, Investore embarks on capital-raising
29 March 2020: Investore says retail portfolio deemed essential gives it strength through lockdown
20 November 2019: Investore raises capital to buy 3 more assets from Stride
22 May 2019: Fall in revaluations hits Investore result
Attribution: Company release.