Property for Industry Limited Analysis

Overview

Property for Industry Limited ("PFI") is an NZX listed property vehicle specialising in industrial property.

PFI's nationwide portfolio of more than 90 properties is leased to around 150 tenants.

PFI was formed in 1993, and has been listed on the NZX under the code "PFI" since December 1994.

Performance

The following information has been extracted from Property for Industry's half year results, released on 25 February 2025

PFI has delivered another robust set of operating results, highlighting the continued stability of the Company’s industrial property portfolio and disciplined execution of its strategy. Profit after tax of $28.8m is up $7.6m on the pcp and incorporates a fair value gain of $16.6m on the Company’s $2.1bn industrial property portfolio, as compared to a $4.2m fair value loss in the pcp. Positive leasing outcomes within the core portfolio, supported by the completion of the Company’s 5 Green Star redevelopments[2] and an improving interest rate environment, have combined to support steady earnings, operating cash flows and dividends.

Highlights

• Robust interim result: Profit after tax of $28.8m, up $7.6m on the pcp, incorporating fair value gains on properties of $16.6m, as compared to losses of $4.2m in the pcp, Funds From Operations (FFO)[3] down 3.8% on the pcp to 4.84 cents per share (cps), Adjusted Funds From Operations (AFFO) down 4.9% on the pcp to 4.35 cps, reflecting increased interest and tax, interim cash dividends of 4.00 cps.
• Continued stability of portfolio fundamentals: Valuation of $2.1bn industrial property portfolio showing signs of recovery, 15 properties revalued at the half-year, fair value gains on properties of $16.6m or 3.1%, net tangible assets confirmed at $2.72 per share, $36.7m of contract rent reviewed during H1 FY25 delivering an average annualised uplift of 6.6%, $2.9m of contract rent leased during H1 FY25 at an average of 21.3% above previous contract rents, occupancy increased to 99.9% post-balance date, no contract rent due to expire in the second half of FY25.
• Next phase of Green Star development pipeline commenced: $220m of 5 Green Star developments completed on-time and on-budget across 30-32 Bowden Road and Stage 1 of 78 Springs Road, Stage 2 of the redevelopment of 78 Springs Road commenced and ~60% leased, opportunity to deploy ~$355m on Green Star development over the medium-term.
• Disciplined capital management: $550m of facilities refinanced or established during H1 FY25, $100m PFI010 bonds repaid in November 2024, ~$180m of facility headroom, gearing comfortable at 33.4%.
• Outlook: PFI well placed to navigate the remainder of FY25, guiding to cash dividends of 8.50 cps, an increase of 0.20 cps or 2.4% on annualised FP24 dividends.

Interim result

PFI reported a profit after tax for the interim period of $28.8m (5.73 cps), as compared to $21.2m (4.22 cps) in the pcp. H1 FY25 profit after tax includes a $16.6m fair value gain on the independent valuation of the Company’s property portfolio, as compared to a $4.2m fair value loss in the pcp.

H1 FY25 net rental income[4] of $51.9m was up $3.5m (7.3%) on the pcp ($48.4m), due to the impacts of brownfield development projects completing (+$2.5m) and positive leasing activity (+$2.0m), partly offset by divestment activity (-$0.6m) and vacancy (-$0.5m).