http://nz.biz.yahoo.com//091105/3/fixv.html

Kiwi Income Property Trust lifted half year distributable profit 3.9 percent to $29.9 million, as total revenue grew 6.9 percent to $95.5 million.

But a 3.5 percent or $65.8m reduction in the value of the trust's property portfolio, together with other non-cash adjustments, resulted in an after-tax loss of $18.2m for the six months to the end of September.

As at September 30, the trust's total assets were $1.84 billion.

An interim cash distribution of 3.75c per unit is to be paid, and the trust said today that in line with previous guidance and subject to economic conditions, a full year distribution of 7.5c per unit was projected.

At September 30 occupancy across the core retail and office portfolio remained at a healthy level of 98.5 percent with a weighted average lease term of 4.2 years, the trust said.

Annual retail sales from the trust's six shopping centres to September 30 were $1.04b, including GST, down 2.7 percent on the corresponding period last year on a like-for-like basis.

The decline reflected recessionary conditions that had prevailed during the past year and the resulting nationwide contraction in household spending.

Specialty shop rents on renewals and new leases during the last six month period had been about 10 percent less than previous contract rents, the trust said.

That figure was largely determined by the significant renewals programme under way at Northlands Shopping Centre.

At Sylvia Park Shopping Centre, new market rents had been recorded at levels about 6.8 percent above previous contract rents.

The retail portfolio was 99 percent occupied at September 30.

The trust said its shopping centres generated 58 percent of core portfolio income, about 90 percent of which was from supermarkets, department stores, c inema operators and, national and international retail chains.

With its office portfolio, the trust said that while it had seen good rental growth during the past few years, the cycle had turned with market rents softening and overall vacancy rates rising.

The demand outlook for office space was subdued, with many businesses rationalising space requirements, employing fewer staff, and adopting a cautious outlook.

At the same time, the supply of new office space in the main centres was increasing. Recently completed or planned developments largely had pre-committed tenants, resulting in surplus space in buildings that were vacated, the trust said.

Despite the softening market, occupancy across the office portfolio was 97.9 percent at September 30, and the weighted average lease term was 4.3 years.

The portfolio was well leased to quality tenants from the government, legal, professional services, insurance and banking sectors, the trust said.