This article is from the Australian Property Journal archive
THE Challenger Kenedix Japan Trust has given a positive outlook for FY10 after making an operating profit of $32.99 million for the year to June 30 – up 51.7% from last year.
But CKT booked a net loss of $55.0 million after allowing for property devaluations of $33.9 million, and mark-to-market accounting adjustments on currency and interest rate hedges of negative $57.0 million.
Net tangible assets were $2.02 per unit as at June 30.
Fund manager Brett McCarthy said the first half of FY09 was characterised by extreme volatility in the AUDJPY exchange rate which adversely impacted gearing and headroom under some currency hedge contracts.
“To remedy this situation, CKT implemented capital management initiatives including cutting distributions to around 50% of real estate earnings and activating the Distribution Re-investment Plan. In the second half of FY09, these initiatives along with a stronger AUD resulted in total fund gearing falling to 56.6% as at 30 June 2009 – a substantial improvement from 60.7% at 31 December 2008,” he added.
In FY09 CKT generated net property income of $43.5 million and other income of $5.9 million – primarily interest income on cross-currency swaps. After borrowing costs of $10.4 million and operating expenses of $6.0 million, CKT produced a profit from operating activities of $33.0 million. This was an increase of $11.3 million on the prior corresponding period due to an expanded property portfolio and currency movements.
At June 30, gross assets were $840.9 million, an increase of $153.8 million or 22% over 30 June 2008 due to currency movements. Net assets attributable to unitholders were $305.5 million (compared to $286.8 million at June 2008), with NTA of $2.02 per unit (compared to $1.91 at June 2008).
McCarthy said whilst the Japanese economy continues to struggle under the weight of the global downturn, the trust remains comfortable with the security of its rental income.
“CKT continues to perform strongly despite the broader impact of global and regional issues.
“CKT is well positioned to deliver on its FY10 distribution guidance of 6.75 cents per unit, an increase of 3.8% over FY09 distributions,” he concluded.
Australian Property Journal
