You have much more flexibility with distributions than you do from dividends. You cannot pay a franked dividend without taxable income to back it up (otherwise, you have to call it a return of capital). If you have any retained earnings (with attached franking credits) - ie. past profits in reserve - you can also pay dividends out of those.
Trust distributions, however, can come from either current or retained profits (which include realized and unrealized capital gains) or straight returns of capital. Whether or not you need to reduce the total number of units on issue to conduct a capital distribution depends on the trust deed.
We don't know, but I would suspect that the property trust had some extra retained profit left over in the kitty (probably from all of those revaluations it's been doing the past few years).
However, the property development arm is run by the company. That's what has reduced its contribution to the distribution. It follows that it was less profitable than management estimated a mere one month ago, when the September quarter dividend details were released.
For comparison, the Sept 05 4c/share distribution included a 2.4c/share franked dividend component; the Sept 06 4c/share distribution included a 2.14c/share franked dividend component.
A month ago, it was announced that the franked dividend component of the Sept 07 distribution would be 1.3c/share. Now, it's 0.9c/share.
Whaddaya reckon? Right direction? Or wrong direction?
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