Kiwi Property Group has posted a 43 per cent fall in annual profit as the value of its property portfolio rose at a slower pace than a year earlier, and it expects more moderation in the broader real estate market.

Net profit fell to $143 million in the 12 months ended March 31, from $250.8m a year earlier, the Auckland-based company said on Monday.

The difference was largely due to a $41m increase in the fair value of Kiwi Property’s portfolio in the latest financial year, compared to a $175.9m boost in 2016. Funds from operations, the company’s new preferred earnings measure, rose 13 per cent to $102.8m.

“While the property sector is currently strong, we do expect the high level of value growth we have witnessed in recent years for investment grade real estate to begin to moderate as interest rates continue to rise from historic lows,” chairman Mark Ford said.

However, the company was confident it would continue to deliver a strong performance, given a supportive economic and property market fundamentals.

Kiwi Property has been selling properties to fund its new development plans including expansion of its Sylvia Park, New Lynn and Westgate sites in Auckland. However, its recent bid to sell two Wellington properties to NPT and buy the smaller company’s management contract was knocked back last month.

The company will pay a full-year dividend of 6.75 cents per share, in line with guidance, and up from 6.6 cents a year earlier.

The shares last traded at $1.425 and have increased 2.9 per cent so far this year, lagging behind a 7.4 per cent gain on the S&P/NZX 50 index.

The value of Kiwi Property’s property portfolio rose to $2.97 billion as at March 31 from $2.67b a year earlier, due largely to the acquisition of a half-stake in Waikato Tainui-owned The Base retail site near Hamilton.


By Paul McBeth