Grosvenor property growth slows

Press, 4 July 1979, Page 19

Grosvenor property growth slows

PA Auckland With one or two exceptions, the trend of increasing values of the properties of Grosvenor Properties, Ltd, has continued, but at a slower rate, says the chairman (Mr H. J. Radford) in the annual report.

This reflects a reduced demand for leased premises by the commercial and industrial community generally, resulting from the lower economic outlook. However, increases in interest rates, have led to some increase in the returns acceptable to property owners on new leases.

But the present high level of interest rates continues to inhibit fund raising for the purchase and leasing of new properties.

The policy of paying a large percentage of income continued and the Grosvenor board was able to recommend an increased dividend after the increase in income in the year to March 31. Increases in capital values had led to increased rents under the leases reviewed and the board hoped this would continue.

Successful negotiations with Fletcher Trust and Investment Company, Ltd, for the purchase of a block of properties had resulted in a significant increase in Grosvenor’s total assets.

The method of payment, including shares with a deferred and limited divi- . dend participation and midto long-term debentures, would lead to significant benefits to shareholders as property values and rental ] returns continued to rise. , The immediate future was ! “not particularly rosy” but there were no grounds for' pessimism in the longer term, he says. As reported, group net trading profit rose 54 per cent to $100,995 and the directors have recommended a tax-free dividend of 3.5 c (14 per cent), requiring $93,750 on higher capital after the issue to Fletcher Trust. The dividend is covered 1.1 times by the profit.

Revaluation increase for the year was $503,672 against $121,486 for 1977-78. Earnings from rents almost doubled to $617,631, while working and administration expenses almost doubled too, to $534,735. The net asset backing a share is fractionally higher at 75.7 c.

Shareholders’ funds rose $948,423 to $2,839,453, and the earning rate on the funds was 3.6 per cent. Working capital changed from a surplus of $212,702, to a deficit of $105,984.