Published 24 April 2009
Kermadec Property Fund Ltd said yesterday the value of its property portfolio had been cut by a net 6.1% ($8.4 million) from September to March, representing a 57 basis point softening in the average capitalisation rate of the portfolio. Chris Francis, director of Kermadec manager Augusta Funds Management Ltd, said: “Together with the 25 basis point softening that was recorded at September 2008, this brings the total reduction in portfolio value for the March 2009 financial year to $12.9 million.” The portfolio now has an average cap rate of 9.23%, 93% occupancy and a weighted average lease expiry of 5.7 years. Net tangible assets/share (excluding deferred tax on revaluations) fell from $1.13/share a year ago to 90c. “Included in this NTA is a $4.2 million unrealised loss on the mark to market of interest-rate swaps” Mr Francis said. Bank debt (net of cash held on deposit) equated to 41% of total assets. A year ago it was 34.6%. Gearing rose from 31% to 42% after the company settled its purchase of the Finance Centre podium but was expected to drop back to 38% once it settled the sale of its Hamilton property last November. Directors previously indicated that shareholder distributions would be limited to operating cash earnings: “The reduction in property valuations now creates a need to preserve capital, and a further reduction in cash distributions to an annualised rate of 5c/share will apply from the March 2009 quarter. Kermadec expects to release its preliminary financial results on Friday 15 May.
Forsyth Barr Ltd property analyst Jeremy Simpson said yesterday Kermadec’s gearing was a sector high. He’s forecasting that that ratio could rise to about 45% over the next 2 years.
Compared to a share price yesterday of 43c, Mr Simpson said: “Our discounted cashflow valuation is 71c and our NAV (estimated mid-cycle NTA less a value for the management contract) is 65c.” Earlier story:
7 November 2008: Kermadec books loss but strengthens balance sheet, now marking time
Attribution: Company release, Forsyth Barr release, story written by Bob Dey for the Bob Dey Property Report.