Argosy lifts annual earnings 5% as portfolio shift drives up rental income

Argosy Property [NZX: ARG], the country's fourth-biggest listed property investor by market value, lifted distributable earnings 5 percent as a shift in the company's portfolio helped lift rental income.

Distributable profit, the preferred measure for property investors which strips out unrealised movements in the value of their portfolio, rose to $50.4 million, or 6.25 cents per share, in the 12 months ended March 31 from $48 million, or 6.02 cents, a year earlier, the Auckland-based company said in a statement. Net property income gained 8.2 percent to $98.4 million as the Argosy's occupancy rate increased to 99.4 percent from 99.2 percent and weighted average lease term stayed high at 5.24 years from 5.54 years.

"Favourable market conditions have continued and low interest rates and solid economic growth are expected to remain for the foreseeable future," Argosy said. "We are confident that with a diversified portfolio of good quality and well-located properties, a clear investment strategy and the continued application of a patient, careful and disciplined approach to property investment and management, the company remains in a great position to enable us to make the most of these economic conditions."

Argosy has been diversifying its portfolio outside Auckland, buying industrial properties rather than malls and retail investments.

Its investment property portfolio was valued at $1.37 billion as at March 31, up from $1.31 billion a year earlier, and was made up of 39 industrial properties, 17 office buildings, and 10 retail sites.

Net profit rose 15 percent to $78.9 million, including a $42.2 million revaluation gain.

The board declared a final dividend of 1.525 cents per share, payable on June 29 with a June 15 record date. That takes the annual payout to 6.025 cents, more than the 6 cents projected, and Argosy expects to pay dividends totalling 6.1 cents in the 2017 year.

The shares last traded at $1.18 and have increased 3.1 percent so far this year. The stock is rated an average 'hold' based on six analyst recommendations compiled by Reuters, with a median target price of $1.15.

(BusinessDesk)