Challenger Wine Trust has posted an operating profit of $7.2 million for the half year to December 31, 2006, up 11.4% over last year.
CWT contributed the increased profit result to higher net property income across the trust’s 32 property portfolio and lower financing costs.
CWT will pay a distribution of 4.64 cents per ordinary unit for the half year, an increase of 1.8% over the December 2005 half year distribution of 4.56 cents.
CWT’s chief executive Chris Atkins said the long term nature of CWT’s leases, combined with their fixed rent review structures, provide a high level of stability and transparency to CWT’s rental income stream.
CWT’s portfolio continues to generate a low risk rental income stream, with only 4.2% of the portfolio’s income subject to expiry prior to June 30, 2008.
Lease extensions to McGuigan Simeon Wines at Hermitage Road Winery and Sandy Hollow, Cowra and Waikerie vineyards were negotiated during the period. These lease extensions included some reductions in rent, which in FY2008 will equate to $185,000.
CWT has also negotiated the sale of its Grande Junction development property to McGuigan Simeon Wines on or before 30 June 2007. The price paid will be reflective of capital expenditure by CWT up to the date of sale, which is forecast to be $6.9 million. Following the sale of the Grande Junction development, CWT has remaining capital expenditure commitments of $6.0 million outstanding.
In December 2006, Nick Gill was appointed to the role of fund manager for CWT.
Looking ahead, Atkins said the impacts of the adverse weather conditions experienced in the first half of the year are likely to persist into 2008, which whilst not effecting CWT’s income returns, will increase the price paid for grapes in some regions, which should have flow-on effects on the value of vineyard properties.
“In this environment CWT will continue to source and assess opportunities to buy, sell or develop assets that will enhance portfolio diversification and improve growth prospects whilst maintaining the high security of income that CWT currently enjoys,” he concluded.
CWT shares closed 0.53% or 0.005 cents lower at 93 cents.
Australian Property Journal
