ING Property Trust has announced to the New Zealand Stock Exchange a slight decline in value of its portfolio by 1.3 percent or $14.2 million.
It meant a resulting increase in the yield on market rentals from 8.3 percent to 8.6 percent.
The review, by independent valuation company DTZ New Zealand, did not include full inspections or new reports, but examined the likely effect on value of the softer investment environment as a result of the weaker domestic economy and the global financial markets.
Rental growth since the March 31, 2008 balance date has mitigated the value decline.
The yield on contract income increased from 7.8 percent to 8.2 percent leaving the portfolio under-rented by 4.2 percent, down from the 6.7 percent at balance date.
The reduction in value reduces the undiluted net tangible asset backing per unit by 3 cents to $1.34, allowing for an adjustment for deferred tax, but does not affect the income returns.
The directors continue to forecast a dividend of 8.7 cents per unit for the current year. The trust's portfolio is diversified by sector, location and by tenant mix with 80 properties and 373 tenants.
The trust's largest tenant by rental income accounts for only 3.8 percent of the total income from the portfolio.
At the current unit price, ING units are providing a cash return of 12.3 percent per annum, and an effective return to 39 percent taxpayers under the Portfolio Investment Entity regime of 20 percent a year.
"The result highlights the resilience of the trust's high quality property portfolio. The assets held by the trust are generally smaller value assets for which there is greater liquidity and there are more buyers in the current market," said Michael Smith, chairman of ING Property Trust Management Limited, the manager of ING Property Trust.
"While there has been some softening in values, it is clear that the current market favours smaller and more affordable assets. This is the reverse of the trend of previous years where a premium was attached to larger assets that appealed to the international investors now largely not in the market"
At the close of the stock market yesterday ING Property shares were worth 70c.
