Kiwi Property delivers office building at Sylvia Park, looks ahead to Drury

Monday, 20 May 2019

Kiwi Property chief executive Clive Mackenzie showing Franklin resident Juliet Reynolds some of Kiwi Property's early concept plans for a Drury town centre.

Kiwi Property has completed its first office building at Sylvia Park called ANZ Raranga and the first of two new car parks as part of its strategy to lift income from existing assets and build intensive mixed-use developments.

Stronger property revaluations drove profits higher for one of New Zealand's biggest office and retail companies.

The after-tax profit of $138 million for the year ending March 2019 was well ahead of last year's $120m.

Chairman Mark Ford said the company was continuing to build its investments in Auckland where half the population lived and much economic activity took place.

Kiwi Property new offices in downtown Auckland designed by Warren and Mahoney Architects.

* Kiwi Property is positioned for growth and development

* Kiwi Property commits to a greener future**

The Base, Te Rapa industrial and retail development at Hamilton.

The company was preparing plans for a community development at Drury where it owns 50 hectares, combining retail, office, entertainment, residential, civic and recreational uses.

Chief executive Clive Mackenzie said the company had decided to expand the galleria retail development at Sylvia Park which will lift the project cost by $35m to $258m.

'We are finalising negotiations with international and national tenants to provide further strength for the project, in addition to the two-level Farmers department store and other retail tenancies already secured.'

One of Kiwi Property's assets is Westgate Lifestyle centre in Albany, Auckland.

Construction was also under way for a new Kmart store at Sylvia Park. In Christchurch, Kiwi has completed a dining development, Langdons Quarter, at Northlands Shopping Centre.

These developments will contribute progressively to shareholder returns from 2020 onwards.

The company's evolving strategy included intensifying large landholdings by developing mixed-use communities, growing income from existing assets and establishing a team to investigate funds management opportunities, Mackenzie said. Kiwi Property has traditionally been retail and office focused.

Kiwi Property has also received a number of inquiries from potential office tenants to lease space at The Base at Hamilton.

Kiwi Property chief executive Clive Mackenzie at Sylvia Park.

'There's the possibility of a hotel and again more entertainment, food leisure and possibly medical at The Base,' Mackenzie said.

During the year the company claimed a 3 per cent reduction in carbon emissions, saving of 87,000 plastic water bottles by installing free water filling stations, and becoming New Zealand's largest commercial user of solar energy.

A 'sustainability committee' was supported by a facilities manager who received incentives for reaching targets.

In 2015, Kiwi set a zero employee 'notifiable injury and illness' target.

'We have achieved this standard in every year since. As a responsible landlord, we are also focused on reducing notifiable injury and illness for our contractors and visitors to our sites.'

Kiwi Property's mixed retail and office buildings were 99.3 per cent occupied, with a combined weighted average lease length of 5.2 years.

The value of sales from Kiwi's shopping centre assets was $1.53 billion, up 2 per cent, with specialty shops ahead. When the company's large format stores were included, the total value of retail sales was $1.7b.

Mackenzie said there were 747 new leases or rent reviews, providing a 4 per cent lift in rents.

When property revaluations were excluded, the company's income from leasing and sales was slightly down at $106m compared with last year's $111m.

This was because the company sold two properties to reinvest proceeds into the developments at Sylvia Park that it considers superior. One of them was North City Shopping Centre in Porirua, sold for $100m.

Revenue from leasing, sales and management income was $237m and higher property revaluations added $47m, taking total income to $286m. Expenses took $124m and tax $24m, leaving profit of $138m.

A final dividend of 3.4 cents a share takes the full year dividend to 6.95c, with a forecast of 7.05c for the coming year. The debt ratio is 31 per cent.

Some of Kiwi Property's well known retail properties include Sylvia Park with a value of nearly $1b, Northlands Shopping Centre in Christchurch ($247m), LynMall ($284m), and Westgate Lifestyle ($90m).

Office properties in Auckland include Vero Centre ($450 million), ASB North Wharf ($230m), Aurora Centre ($160m), and in Wellington, 44 The Terrace ($54m).