Stride Property Group posted flat annual earnings as it beds in a new strategy and reshaped portfolio where it clips the ticket as a property manager as well as directly owning real estate.
Distributable earnings, a favoured measure of property investors which strips out unrealised movements in the value of a property portfolio, rose to $38.8 million, or 10.63 cents per share, in the 12 months ended March 31, from $37.7 million, or 10.33 cents, a year earlier, it said in a statement. Net profit jumped to $95.3 million from $53.3 million, including a $48.3 million gain in the fair value of the 26 property portfolio.
Stride 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. Stride's management fee income climbed 56 percent to $13.3 million, while net rental income dipped 0.5 percent to $57.6 million.
"The decision to focus on real estate investment management has resulted in significant growth in this part of Stride’s activities and confirms Stride as a leader in the New Zealand property sector," chair Tim Storey said in the annual report. "Overall, our results were in line with or higher than the prospective financial information provided at the time of Stride’s formation in 2016."
The board declared a fourth-quarter dividend of 2.57 cents per share, taking the annual return to 9.91 cents, a level it expects to pay in the 2019 financial year.
Stride shrank its direct property portfolio in the period, selling three Bunnings properties to Investore, while signing up to a $43 million development for Waste Management in Auckland. The portfolio was valued at $902.2 million, up from $895.3 million a year earlier. The weighted average lease term was 5.1 years, up from 4.9 years a year earlier, while the occupancy rate edged down 0.1 of a percentage point to 96.7 percent.
The company's eight office buildings were valued at $223.6 million with net contract rental of $16.3 million from 69 tenants. Its 10 industrial buildings were valued at $195.7 million, generating net contract rental of $10.8 million from 18 tenants, and six retail properties valued at $419.1 million attracted net contract rental of $27.2 million from 291 tenants. Its remaining large format retail building was worth $42.8 million with net contract rental of $2.3 million.
Stride also manages 40 properties on behalf of Investore and another three for Diversified Property Trust.
Stride shares rose 0.6 percent to $1.78.