Yes, there should be partial franking credit cover on future...

Yes, there should be partial franking credit cover on future profitability to the extent that profit is earned in Australia, so maybe the significant boost to the franking credit account arising tax payable on the property sales sets PTB for fully franked dividends for quite a few years to come. If most of PTB’s future growth is to come from the United States, the proportion of tax paid in Australia would be expected to decrease and therefore over time limit the ability of PTB to fully frank dividends.

Its interesting that PTB didn’t work through this change in The Australian tax payable dynamic when they announced the dividend policy change in October 2020 when they were presumably working on the Warriewood property sale by then (given it was finalised in December 2020 and they would have had a feel for the likely sale price).

The property sales have freed up significant liquidity which has enabled PTB to get away from its reliance on heavily discounted DRP. The high DRP participation levels (I suggest driven by the 5% discount) negated the benefit of the declared dividend from a shareholder perspective because each shareholders proportionate ownership of the company only marginally increased. The high DRP participation Meant that shareholder value from the franking credits wasn’t great.

I guess if we had reflected further on the implications of the property sales, we could have foreseen a healthy FY21 dividend that would be fully franked. The updated dividend policy (30 to 50% of NPAT) was however a little unclear as to whether one off items such as property gains were included in the NPAT for these purposes.