Commercial property investment trust Investa Office Fund will lift its dividend in the year ahead despite announcing a slight fall in full-year profit today.
In the 12 months to June 30, statutory profit fell 2.4 per cent to $179.2 million.
After adjusting for fair value movements and other non-operating items, funds from operations increased 4.5 per cent to $169.9m, the company said, boosted by leasing results ahead of expectations and lower debt costs.
Revenue rose 12.1 per cent to $217.5m.
The group announced a final dividend of 9.7c, unfranked, for a total dividend of 19.25c, up 0.75c -- or 4.1 per cent -- on the year before. The final dividend will be payable to shareholders on the register at June 30.
IOF said its Melbourne and, particularly, Sydney assets -- which account for 78 per cent of its portfolio -- had performed well but that markets in Brisbane and Perth remained "challenging".
“Although the weak markets of Brisbane and Perth are impacting our ability to lease space, we remain confident we have strong local operators to drive good outcomes for IOF," assistant fund manager Alex Abell said.
"Our assets are well located, and offer high quality and affordable space; which is a point of difference to the imminent supply and back-fill coming to market later in 2015 and 2016. We believe these factors continue to position us well moving forward.”
IOF said it would lift its total dividend again in the year ahead to an expected 19.6c "subject to prevailing market conditions."
IOF fund manager Ming Long said FFO growth was ahead of expectations.
"And the 8.1 per cent growth in NTA [net tangible assets] over the period reflects the quality of the IOF portfolio, and demand for assets with de-risked income streams," she said.
IOF also sold its final offshore asset during the year, and "less than 7 per cent of IOF’s income expires in the next 12 months; taking into consideration the development of 151 Clarence Street, Sydney, which will be demolished in March 2016," Ms Long said.