Ann: FLLYR: PFI: PFI delivers consistent dividend

• Release Date: 20/02/12 10:39
• Summary: FLLYR: PFI: PFI delivers consistent dividend
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PFI
20/02/2012 08:39
FLLYR

REL: 0839 HRS Property for Industry Limited

FLLYR: PFI: PFI delivers consistent dividend

PFI delivers consistent dividend

Listed industrial property investor Property For Industry (PFI) has
maintained a consistent net dividend to shareholders for the full year to 31
December 2011, after facing the challenges of reduced rentals, higher finance
costs and higher taxes.

PFI's rentals for 2011 were 5.3 percent lower than the previous year, at
$30.81 million, primarily due to the company's property sales and lower
portfolio occupancy, partially offset by new revenue from completed
developments and rent reviews. However, total operating expenses for the year
were also lower, in line with the lower rentals.

Interest, PFI's largest single expense item, was up $221,000 or 2.7 percent
to $8.34 million as higher bank margins and fees were offset by lower average
borrowings following property sales. The company also continued to benefit
from low floating interest rates.

Current tax for the year rose by $1.245 million or 55.5 percent to $3.49
million due to two factors: firstly, the removal of the company's ability to
depreciate building structures with useful lives of more than 50 years for
tax purposes, and secondly, prior-year tax adjustments received by PFI in
2010.

PFI's distributable profit after tax for 2011 - the profit available for
distribution to shareholders - was $15.77 million, down $2.4 million or 13.3
percent from 2010. This equates to 7.21 cents per share (2010: 8.42 cents per
share). PFI's board resolved to maintain the total net dividend for 2011 at
the same level as the previous year: 7.175 cents per share, equating to a
pay-out ratio of 99.3 percent (2010: pay-out ratio of 85.2 percent).

PFI shareholders will therefore receive a fourth-quarter dividend for 2011 of
2.425 cents per share plus imputation credits of 0.309 cents. The dividend
record date is 5 March 2012 and payment will be made on 14 March. The
company's dividend reinvestment scheme is in place for the dividend and the
discount rate for shares issued under the scheme remains at 2.5 percent.

PFI's annual independent portfolio revaluation as at 31 December 2011
resulted in an unrealised net increase in portfolio value of $3.65 million.

This gain, in combination with NZ IFRS-required non-cash adjustments such as
deferred tax and movements in interest rate swaps, meant PFI recorded a net
profit after tax for 2011 of $16.35 million (2010: $10.00 million).

Net tangible assets per share (NTA) remained steady at $1.08.

PFI's gearing (borrowings to total assets) as at 31 December 2011 was 28.6
percent, down from 30.9 percent a year earlier.

PFI general manager Nick Cobham, representing PFI's new manager PFIM Ltd,
said the gain in PFI's portfolio value, equating to about 1 percent, was
encouraging and underlined the resilience of industrial property. Valuation
capitalisation rates across the PFI portfolio had firmed by about 20 basis
points to about 8.5 percent. Market face rents were assessed as having held
their ground during the year; however, incentives remain a feature for
attracting long-term leases.

Portfolio occupancy as at 31 December 2011 was 95.6 percent, with a weighted
average lease expiry (WALE) of 4.17 years (2010: 99.5 percent, 4.08 years).

During 2011, PFI secured 15 new leases and retained a further 17 existing
tenants, representing more than 30 percent of the company's annual contract
income.

Mr Cobham said occupancy had improved since year-end, with PFI having secured
a new tenant for one property and at formal documentation stage with tenants
for two other properties, including the company's largest vacancy at 54
Carbine Rd and 6a Donnor Pl, Mt Wellington.

He said PFI was expecting market conditions to remain challenging in 2012. "A
prolonged period of difficult trading conditions and global uncertainty has
been testing for all New Zealand businesses, and the companies that occupy
PFI's properties are no exception.

"It is a time for continuing to do the basics well. A key priority is
focusing on earnings by addressing PFI's current vacancy and upcoming lease
expiries, and looking to recycle capital and deploy debt capacity into
accretive core industrial opportunities."

PFI's portfolio of 49 properties is occupied by 99 tenants and has a total
value of $355.9 million.

For further information:
Nick Cobham
General Manager
Phone 09-303 9656 or 021-464 583?
Email: [email protected]
End CA:00219716 For:PFI    Type:FLLYR      Time:2012-02-20 08:39:12