NPAT up n/m on $248.2m revaluation; underlying FFO up just 12.1%

NPAT rose to NZ$273.5m from NZ$15.6m (n/m and PBT to NZ$286.0m from NZ$21.5m (n/m, with NZ$248.2m of fair value gains on investment properties doing most of the work. Management's preferred operating measure, Funds From Operations, was up 12.1%.

Reported revenue jumped 538.1% to NZ$306.5m, but the prior-comparable line was "Rental and management fee income" (NZ$48.0m) while the current line is "Total income", which includes the revaluation. The two periods are not like-for-like at the top line.

Operating cash flow tripled to NZ$40.0m from NZ$12.6m, and pre-lease free cash flow of NZ$27.7m sits above the historical baseline range (mean NZ$-3.1m). The interim dividend is flat at 1.8c per share (3.6c declared for the half).

• PBT margin of 93.3% is well above the historical range (mean 32.5%), and NPAT margin of 89.2% is similarly elevated — both driven by the NZ$248.2m property uplift, not by recurring rental economics. For an industrial landlord, this matters because cap-rate-led gains do not generate distributable cash and can reverse if yields move.
• Underlying rental performance is solid but unspectacular. FFO up 12.1%, occupancy of 99.5%, WALT of 4.79 years, and only 1.1% of contract rent expiring in H2 2021 point to a stable income engine. NTA per share rose 22.9% to NZ$2.714, which is the cleanest reflection of the revaluation in shareholder terms.
• Balance sheet expanded with leverage. Total assets grew 35.6% to NZ$2.1b and total equity 32.6% to NZ$1.4b, but gross borrowings rose 43.4% to NZ$605.4m and net debt to roughly NZ$604.1m. Stated gearing of 30.0% remains within typical industrial-REIT comfort, supported by the Carlaw Park divestment secured at NZ$110.0m and NZ$138.3m of core industrial deployment.

The supplied shape context shows HY20 was 49.3% of FY20 revenue but only 13.8% of FY20 NPAT, because H2 FY20 captured most of last year's revaluation — so the full-year NPAT comparison will normalise once H2 FY21 lands. On a rental basis, the very low expiry exposure (1.1% of contract rent in H2 2021) and 99.5% occupancy support a steady underlying income line into H2.

The release does not quantify post-divestment redeployment timing or the cap-rate assumptions behind the revaluation, so the durability of the NZ$248.2m uplift cannot be tested from the supplied material.

The NZ$248.2m fair value gain explains the bulk of the PBT and NPAT jump, the effective tax rate dropped to 4.3% from 27.1% (consistent with most of the gain being non-taxable revaluation), and FCF-to-NPAT collapsed to 10.1% from 37.4% — a function of the inflated NPAT denominator rather than weak cash generation. Operating cash flow itself is genuinely stronger.

Payout ratio versus pre-lease FCF is 52.3% based on the source-backed deterministic derivation.

This briefing cannot assess the cap-rate, valuer, and asset-level assumptions underpinning the NZ$248.2m revaluation, or the run-rate rental growth absent a comparable revenue disclosure.