Argosy Property Limited

Gross property income was $137.5 million versus $132.7 million last year, up 3.6%. Net property income was $120.8 million, up 3.3% year over year. Net profit after tax was $127.7 million versus $125.9 million last year. Gross distributable income was $70.4 million, up 9.8%, and net distributable income was $0.0705 per share versus $0.0658, up 7.1%. Adjusted funds from operations were $59.1 million versus $54.6 million, up 8.3%, or $0.0685 per share versus $0.0643. The full-year dividend was $0.0665 per share, and FY27 dividend guidance is unchanged at $0.0665 per share. Debt to total assets was 37.2% at 31 March and has since fallen to just over 36%; weighted average cost of debt was 4.6% versus 5.1% last year, and interest cover improved to 2.7x from 2.5x.

Peter Mence said the year was challenged by geopolitical conflict, imported inflation, and a slow leasing market, but emphasized that the portfolio performed reasonably well. He pointed to stronger-than-expected rent reviews, decade-high tenant retention, and good demand for green industrial assets, while noting that office inquiries have been better than expected and Albany retail is seeing upside. His tone was cautious but constructive, repeatedly stressing resilience, tenant quality, and that the portfolio is well positioned despite uncertainty.

David Fraser highlighted the core financial improvements: gross property income of $137.5 million, NPI of $120.8 million, net profit after tax of $127.7 million, and AFO of $59.1 million. He noted management expense to NPI improved to 9.4% from 9.8%, the management expense ratio improved to 50 basis points from 56, and net interest expense was $2.3 million, helped by lower rates despite higher average debt. He also said the balance sheet is in good shape, with debt to total assets at 37.2% at year-end and just over 36% afterward, average debt cost at 4.6%, fixed-rate capital at 74%, and $265 million added in swaps since September. On capital allocation, he said the DRP is suspended, the dividend policy now targets 80% to 95% of FFO, and FY27 dividend guidance stays at $0.0665 per share.

Analysts focused on the new dividend policy, asking whether maintenance capex or leasing incentives were rising and whether the new 80% to 95% FFO payout range could still leave enough buffer. Management said maintenance capex is expected to be broadly flat and that the new policy was chosen because FFO is more stable than FO; they said the dividend is modeled with sufficient buffer. Questions also centered on Neilson Street’s lease timing, with management confirming commencement has slipped from July this year to 1 March next year and saying they are not happy about the delay, though they have two other tenants in advanced discussions. Another theme was capital allocation, where management said a buyback is possible if developments are stalled and asset sales leave them with a “lazy balance sheet,” but it is only one option among several.