Rental growth expected

Press, 25 July 1985, Page 22

Rental growth expected

Grosvenor Properties, Ltd, expects to lose $50,000 in rental income this year because of the flow-on effect of the Rent Limitation Regulations, says the chief executive, Mr Derek Smith, in the annual report. This is in spite of the regulations being scrapped on November 8 for commercial properties. “However, total rental growth will continue as properties phase out of the 12month period of restriction required before full market rentals are applied after rental review,” he says. Substantial rent increases are also expected from the retail property bought in the central business district in Lower Hutt from the application of true market

rentals. The net trading profit should also be increased because of the substantial reduction in debt in the latest year. The chairman, Mr H. J. Radford, says that the directors are studying proposals for a more rapid growth in the company’s capital structure and in the property portfolio. Because high interest rates virtually stop the financing of prime property by debt, the company will have to rely more on equity as the money source. This means the company will be more selective in seeking quality investments, he says. The group net trading profit more than doubled from $177,420 to $459,669 in

the year to March 31. In addition, there were unrealised property gains of $3,144,472 ($1,325,146 previously). The previous year’s result also included a capital gain of $54,000. Rent income rose 73 per cent to $2,107,019. The profit was after providing $147,888 more for tax at $246,681 and $12,712 more for depreciation at $14,437. A recommended final dividend of 2c a share increases the annual rate from 5c to 7c a share (28 per cent). The dividend requirement is $429,039 and it is covered 1.07 times by the trading profit. Shareholders' funds rose $6,602,603 to $16,042,977 including steady ordinary capital of $1,875,000.