This article is from the Australian Property Journal archive
Macquarie ProLogis Trust has gone on a spending spree buying 16 properties for $US95.7 million. A strong United States industrial market has underpinned yet another steady six months of growth for the trust in spite of rising interest rates.
In the six months to December 31, 2005, MPR reported a net profit of $79.52 million – an increase of 40% when compared to $56.79 million in December 2004.
In addition to the half year result, MPR also announced it will buy another 16 properties for $US95.7 million, sourced from its new ROFO. Five are newly developed ProLogis facilities while the remaining 11 are stabilised assets located in Indianapolis – one of the top 10 US distribution markets and a new market for MPR.
MPR’s chief executive officer Geoff Lovell said the quality of its North American industrial portfolio has again delivered robust returns.
“The trust’s underlying US dollar income has grown steadily despite rising US interest rates. This highlights ProLogis’ ability to capture rental growth in recovering industrial markets and the active management of financial risks,” he added.
Growing demand in North American industrial markets has also underpinned steady growth in the value of MPR’s portfolio with 41 properties revalued during the period, recording a 10.1% increase over prior book value.
In addition, the trust sold its Principio Business Park #1 for $US45.6 million after sale costs, the transaction achieved a realised gain over cumulative costs of $US7.8 million for MPR investors.
Lovell said renewals and acquisitions had reduced the trust’s leasing expiries in financial year 2007 by 300 basis points.
“With 30% of the portfolio expiring over the next two and a half years, MPR is well placed to capture the potential for rental growth in recovering markets,” he added.
Strong leasing results during the 2005 calendar year were also recorded with 3.4% rent growth achieved across 45 leasing deals, contributing to an impressive leased rate of 98.6%. The tenant retention upon expiry of leases also remains strong at 75%. As a result, same store NOI growth was up 0.7% over the prior year.
ProLogis reported leading indicators continue to point to a sustained recovery as job market growth accelerates, underpinning consensus forecasts for 3.0 to 3.5% GDP growth in 2006.
According to Lovell, the Indianapolis assets present income growth potential.
“Because rents across the portfolio are considered almost 8% below market and with some nearer term expiry of leases, MPR should be well placed to capture higher rents as the market recovery gains momentum,”
Looking ahead, Lovell said the size and maturity of the trust’s portfolio and the relationship with ProLogis means opportunities to capture further income and capital growth for the long-term benefit of MPR investors should continue to emerge.
MPR declared earnings per unit of 5.95 cents, up 4.6% on the prior corresponding period, the trust’s net tangible assets increased 15.8% to $1.10 per unit.
By Nelson Yap
