19 Feb 2013

Demand for industrial space seen as picking up

7:02 am on 19 February 2013

Property for Industry says demand for industrial space is picking up, though the property investor says rental growth is expected to be slow.

The company made a profit of $26.9 million dollars in the year to the end of December 2012, an increase of 65% compared with the previous year and boosted by a revaluation of its property portfolio.

But the amount of income that will be distributed to investors fell 7.5% to $14.6 million, which chief executive Nick Cobham said reflects properties sold and higher vacancy rates in the previous year. It will pay a lower total dividend of 6.6 cents a share.

Rental income slipped 5% to $29 million while a higher tax bill pushed up its costs.

Property for Industry has been active in buying and selling properties and Mr Cobham said it is focused on lifting the occupancy rate - which rebounded to more than 97% - as well as lengthening its average lease term, which now stands at 4.8 years.

He said the interesting statistic is contract rent on an annualised basis, which has grown from $30.2 million to $36.2 million and this was likely to act as a fillip for 2013 earnings. About 13% of its contract rent is due to expire this year.

Looking ahead, Mr Cobham said the company is planning to refurbish some properties to attract tenants and fill empty space as demand for industrial property among investors increases.

Property For Industry owns 50 industrial properties worth $382 million.