Stride Property boosted first-half profit 21 percent, with the rising value of its 26 properties offsetting a dip in rental income and management fees.
Net profit rose to $40.2 million in the six months ended Sept. 30 from $33.3 million a year earlier, the Auckland-based company said. That was due largely to a $23.6 million gain in the fair value of its $934.5 million portfolio, a bigger gain than the $14.4 million revaluation a year earlier.
“The past six months have been characterised by considerable leasing and development activity, which has contributed to the improved net property valuations,” chair Tim Storey and chief executive Philip Littlewood said in their report.
Stride’s distributable income, which determines dividends, slipped 0.7 percent to $19.6 million, or 5.37 cents per share, as the property investor’s net rental income shrank to $27.9 million from $29.5 million. The smaller rents were due to the sale of three Bunnings sites to Investore Property, which Stride manages. Management fee income slipped to $7.3 million from $7.7 million.
The board declared second-quarter dividends totalling 2.4775 cents per share payable on Dec. 17 with a Dec. 7 record date. It’s targeting an annual return of 9.91 cents, unchanged from a year earlier. Combined with the first-quarter dividend of 2.4775 cents, Stride will pay $18.1 million to shareholders in the half.
The real estate investor embarked on the new strategy in 2016, carving out its large format retail properties into a separately listed vehicle – Investore Property – in which it retained a 19.9 percent stake and manages for a fee. It manages 40 properties on behalf of Investore and another three for Diversified Property Trust.
Storey and Littlewood said Stride plans to set up a group of commercial property funds to fuel growth in the investment management unit. It would manage and co-invest in the funds.
“This type of growth is indicative of the investment management model we see for Stride, where, as we establish further products, Stride will incrementally benefit as each of our products performs and grows,” they said.
The 26 properties Stride owns had an occupancy rate of 98.9 percent as at Sept. 30, up from 96.7 percent at the end of March, with an unchanged weighted average lease term of 5.1 years. Annualised net contract rental was $57.8 million compared to $56.7 million at the end of March.
Including the Investore and Diversified trust properties, Stride manages 69 properties valued at $2.21 billion.
The shares last traded at $1.88 and have gained 6.2 percent so far this year, the second-best performance among listed real estate investors on the S&P/NZX 50 index.