This article is from the Australian Property Journal archive
VINEYARD property investor Challenger Wine Trust has announced a $16 million operating profit for the FY08 – up 12% over the FY07.
The trust’s net profit after tax was $13.5 million which is up 72% on FY07. Revenue grew 11% to $32.7 million.
CWT’s fund manager Nick Gill said this strong result was underpinned by a re-aligned property portfolio following a number of transactions during the financial year.
“The result also highlights the underlying strength of the agricultural sector, especially for a diversified portfolio in the Australasian vineyard sector,” he added.
The trust announced distributions of 9.4 cents for FY08 up 3.3%.
During the period, CWT independently valued all properties. The result is no net change in fair value. A decrease in the valuation of investment properties and vines of $3.7 million (representing around 1.2% of gross portfolio value) was offset by an incremental increase in the fair value of water rights. CWT’s portfolio is currently 99% occupied and has a long weighted average lease term of 5.7 years.
Gill said during the year CWT continued to manage its capital to ensure that it was securing the lowest cost of capital available. In May, the trust re-financed borrowings with facilities of $166 million provided by existing bankers. The new facilities provide additional capital security through greater flexibility and longer duration with no expiries until 2011.
At June 2008, CWT had total drawn borrowings of $155 million (FY07: $134 million), and a gearing ratio of 49.0% (FY07: 45.2%). Gill said the gearing ratio is within CWT’s preferred range of 45-55%.
Going forward, Gill said CWT will continue to review its portfolio to enhance its geographic diversity.
“The 2008 vintage year was challenging for both winemakers and grape growers. The industry initially anticipated a shortage of grapes due to the perceived lack of available irrigation water, resulting in an early season crop forecast of 1.2 million tonnes.
“For the 2009 harvest year, water availability remains a continuing concern for vineyard owners in the Murray and Murrumbidgee Rivers (warm climate regions) dependent on 2008/2009 water allocations,” he added.
“CWT continues to deliver a stable and predictable income return to unitholders. This is expected to continue into the 2009 financial year, with positive outcomes from rent reviews marginally outstripping any adverse effect on operating profit if vineyards with lease expiries are not re-leased or sold.
“At this point in time we are providing distribution guidance of 9.5 cents per unit up on the FY08 distribution of 9.4 cents per unit,” he concluded.
CWT shares closed 0.005 cent lower at 56.5 cents.
Australian Property Journal
