Investore reports $36.6m profit before tax and $1.1bn portfolio value

Strategic acquisitions lift portfolio value and tenant mix

Investore Property Limited (NZX:IPL) has pushed its portfolio value up 14% to $1.1 billion in FY26, fueled by acquisitions that sharpen its growth outlook and tenant diversification. The purchase of Silverdale Centre and Bunnings New Lynn, representing a blended initial yield of 6.6%, added scale and enhanced exposure to multi-tenanted retail assets, notably increasing Auckland’s portfolio weighting from 41% to 50% on a pro forma basis.

Meanwhile, divestments of Woolworths Browns Bay and New Brighton, and the post-balance sheet sale of Woolworths Greenlane for $35.9 million at a 4.1% premium to book, demonstrate disciplined portfolio recycling. These disposals reduce concentration risk, with Woolworths’ share of contract rental falling from 62% to 51% pro forma, while improving balance sheet flexibility by lowering the loan-to-value ratio (LVR) to 38.1%.

Resilient earnings underpin dividend stability

Investore delivered solid operating earnings with profit before other income and tax rising 4.1% to $36.6 million, and distributable profit after current income tax up 8.1% to $30.7 million. Net rental income climbed 5.1% to $65.5 million, supported by acquisitions and like-for-like rental growth of 4.7%, including 69 rent reviews yielding a 3.1% uplift and 29 mini major and specialty lease renewals with a 17.8% uplift.

Despite a $6.6 million decline in profit after tax to $31.7 million due to a lower net valuation increase, Investore maintained its full-year dividend at 6.50 cents per share, in line with guidance. The Board has signaled confidence in the portfolio's defensive qualities by confirming the same dividend for FY27, implying a 9.3% gross yield based on recent share prices.

Capital management strengthens funding and flexibility

Proactive capital management was a highlight, with $225 million of bank debt refinanced and extended, reducing funding costs and extending maturities to 2029–2030. The introduction of two new lenders enhanced syndicate diversification and pricing competition. Investore also issued $62.5 million in subordinated convertible notes with a 6.25% coupon to support the Silverdale acquisition and provide balance sheet flexibility.

The weighted average cost of debt remained stable at 4.2%, with 80% of drawn debt hedged or fixed, shielding the company from interest rate volatility. The Board increased the LVR covenant from 55% to 60%, while maintaining a long-term target range of 30–40% to balance growth ambitions with prudent leverage.

Sustainability initiatives and portfolio optimisation

Investore continues to lead in sustainability, boasting the largest number of Green Star Performance rated buildings in New Zealand with 21 properties certified. The company is on track to complete the replacement of all R22 refrigerant air conditioning units with lower global warming alternatives by the end of FY27, having replaced 68 units in FY26.

Tenant partnerships remain central to Investore’s strategy, with $6.2 million committed to online expansion works at three Woolworths stores, adding nearly 970 sqm of net lettable area and enhancing online fulfilment capabilities. These capital initiatives are expected to generate a blended rental return on cost of 7.2%, supporting longer-term income growth.

Navigating inflation and market uncertainty

Recent offshore inflation pressures and geopolitical tensions have reintroduced market uncertainty, dampening business and consumer confidence. Nevertheless, Investore’s portfolio, anchored by high-quality non-discretionary retail tenants in key metropolitan locations, provides defensive earnings and resilience.

The Board remains vigilant to portfolio optimisation opportunities, balancing recycling of non-core assets with selective acquisitions to enhance returns and maintain balance sheet strength. The company’s weighted average lease term of 5.9 years and 99.5% occupancy rate underpin income stability amid evolving market conditions.