DB RREEF Trust has reported another strong annual result on the back of a strong domestic office and industrial property market.
Yesterday, DRT delivered a distributable profit of $306.3 million for the year ending June 30, 2006 – up 8.9% over last year.
The trust’s net profit for the year was $1.1 billion, which includes a $686.5 million unrealised gain on fair value of investments and a $76.2 million unrealised gain on financial instruments.
“This is a strong performance reflecting a consolidation of the trust’s domestic portfolio, and significant success in increasing occupancy and lengthening lease durations while growing net lettable area through our development program,” DB RREEF’s chief executive Victor Hoog Antink said.
“Internationally, we have expanded the trust’s portfolio through our recent acquisitions including Minneapolis, France, and today’s announcement of Whirlpool’s investment program in the US, Canada & Poland, along with the creation of new international pipeline opportunities currently under construction in Florida & Dulles. These opportunities have been created through working with our global strategic partner, RREEF.
“Globally, all key indicators improved. The average lease duration is up, occupancy levels for property in each sector are up and we have more than 300,000 sqm of new space currently under development providing us with a substantial pipeline of new lettable areas,” he added.
In the 12 months, the trust’s total property income was $659.7 million, up nearly 30% on the previous year.
DRT’s office portfolio contributed a net income of $222.3 million – an increase of 9.5% over last year. Over the year, the trust secured new leases totalling 62,000 sqm, representing 12% of overall portfolio area.
Following the successful leasing deals, occupancy rates jumped up to 98.2% from 93.5% in the previous year. The average lease term to expiry also rose to 6.3 years, up from 5.9 years.
The industrial portfolio chipped in $110 million, up 5.2% over last year. The division recorded exceptional robust leasing activity totalling 213,000 sqm, representing 18% of portfolio by area. As a result, occupancy rates have risen to 99%.
Meanwhile, the retail portfolio contributed $54.8 million – up 26.3% over last year.
DRT’s international property portfolio contributed $US86 million for the 12 months, up 2.3% over the year. During the year, strong leasing activity resulted in more than 4,600,000 sq ft, or 23%, of portfolio by area executed.
As a result, occupancy rates have risen from 88.5% to 92.5% and the average lease term to expiry increased slightly to 3.5 years.
As at June 30, 2006, DRT has $11.8 billion of funds under management up from $10.3 billion in 2005. The trust’s overall portfolio value has also increased from $6.8 billion to $8 billion.
Hoog Antink said sustainability in property management was increasingly being demanded by tenants, regulators and security holders.
“We’ve taken the view that appropriate action to promote sustainability enhances security holder value over time and, accordingly, this is now a constant consideration in our business,”
Hoog Antink said overall, the outlook is very good.
“We have a strong balance sheet, low vacancies and a good lease expiry profile, a growing development pipeline and a global platform from which to access opportunities for all investor groups,” he added.
DRT currently has a development pipeline valued at $1.3 billion. Meanwhile, yesterday, DRT paid $600 million to buy 11 Whirlpool logistics facilities across the globe.
By Adam Parsons and Nelson Yap
