Market News 11 August 2025

David Colman writes:

On Wednesday, Property for Industry Limited (PFI) provided a leasing and development update and dividend guidance for full year 2026.

PFI specialises in industrial properties and has a portfolio of 91 properties across New Zealand leased to over 120 tenants.

The company advised that it has received the early surrender of GrainCorp Foods NZ Limited’s (GrainCorp) lease at 92-98 Harris Road, East Tamaki. 

The lease was due to expire on 3 November 2028, with one further 5-year right of renewal available to Graincorp, but now the lease ends today, 11 August 2025.

The property will not be leased to another tenant immediately as it has joined PFI’s development pipeline with all the existing buildings and other infrastructure on the site scheduled for demolition.

GrainCorp will pay a $5 million surrender fee to PFI as compensation for surrendering the lease early, allowing for operating expenses, and the removal and demolition of plant and equipment left on site.

PFI is expected to gain an after-tax benefit to full year 2026 Adjusted Funds from Operations (AFFO) of approximately $3.5 million (approximately 0.7cps).

PFI has considered the property to be a future development site beyond GrainCorp’s tenancy for some time, mainly because the site is considered relatively underutilised.

The combined building footprint of approximately 7,200 sqm represents only a little above 27% of the 26,300 sqm site.

Plans for the redevelopment of the property include preliminary designs allowing for a large-format industrial facility of approximately 14,500 square metres, with associated office, canopy, yard, and parking areas.

PFI’s website includes the property on its developments page and will provide further updates as its plans take shape.

The project is subject to feasibility, tenant engagement and consents, and could involve an investment of approximately $45 million (excluding land) with the new development targeting a 5 Green Star rating in line with PFI’s sustainability commitments.

PFI also announced an update to its full year 2026 dividend guidance, with dividends now expected to total at least 8.90 cents per share (cps) – at the higher end of guidance between 8.80 and 8.90 cps, representing an increase of between 2.3% to 3.5% on full year 2025 dividends.

The early lease surrender, along with the inclusion of the New Zealand Government’s Investment Boost tax changes (which allows businesses to deduct upfront 20% of the cost of new assets or improvements to existing assets for tax) has resulted in an increased forecast full year 2026 Adjusted Funds from Operations (AFFO).

Full year cash dividends of at least 8.90 cps will be below PFI’s dividend policy pay-out ratio range and will be approximately 85% of AFFO on a one-year basis.

For PFI to pay higher FY26 cash dividends than 8.90 cps will depend on progress on several key efforts including:

- successfully leasing the speculative component of Stage 2 of the 78 Springs Road redevelopment

- confirming development plans and timing for 92-98 Harris Road development

- progress in addressing material full year 2027 lease expiries during full year 2026.

PFI will release its FY25 annual results on 25 August 2025.

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The August results season has begun with T&G Global releasing its half year results.

T&G Global (TGG) started as Turners and Growers more than 125 years ago and is now part of the Global Produce division of the German BayWa conglomerate.

TGG is present in 13 countries and distributes fresh produce to customers and consumers in over 55 countries.

The company’s Half Year Results 2025 highlights:

- Revenue: $920.6 million, up from $820.1 million

- Operating profit: $18.1 million, compared to a loss of $2.6 million

- Net profit before tax: $2.3 million, compared to a loss of $8.2 million

- Net profit after tax: $1.7 million, compared to a loss of $18.6 million

Higher revenue and a return to profitability for the six months ending 30 June 2025 was a significant improvement with the Chair Benedikt Mangold noting that the company is beginning to see the results of its long-term growth and investment strategy.

The company has focused on productivity, efficiencies and cost control across the whole business.

Global demand for its premium apple brands is growing in line with its volumes, and across the business TGG has worked to strengthen customer and grower relationships and optimise its value chain.

Despite global volatility the company has shown resilience.

T&G’s Apples business delivered a sustained uplift in performance, with revenue increasing 15%, to $675.3 million, compared to $589.0 million in the comparable 2024 half year period.

Operating profit increased 99% to $47.2 million, compared to $23.7 million in the corresponding 2024 period.

These improvements reflect significant investment in the company’s long-term Apples strategy.

A high-quality crop was observed across North America and in New Zealand with significant plantings of ENVY™ apples over the past few years described as contributing to a record year for branded apple volumes.

Asian retail programmes were said to be driving new growth with TGG opening a Taiwan office as part of its expansion.

Revenue in T&G Fresh increased to $229.2 million, compared to $218.3 million in the comparable 2024 period, and operating profit increased to $3.7 million, from a loss of $11.3 million in the corresponding 2024 period.

T&G’s VentureFruit business saw its revenue from external customers decrease to $2.9 million, compared to $4.0 million in the comparable 2024 period, due to changes in the timing of invoicing planting fees.

The operating loss increased to a loss of $7.2 million, from a loss of $3.4 million, due largely to phasing of operating expenditure.

The company continues to scale its new premium JOLI™ apple brand, ahead of its consumer launch in 2027.

380,000 trees have been licensed to grow in New Zealand, and test blocks established across Europe this year.

TGG closed up 15c (+6.7%) at $2.40 on Friday and is up an impressive 60% YTD (year to date) comparing well to its peers (NZ listed companies with horticultural exposure) such as Seeka (up 20% YTD) and Scales (up 18% YTD)

Seeka (SEK) and Scales (SCL) release half year results on 20 August and 25 August respectively.

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On Friday, Infratil and the New Zealand Superannuation Fund (NZ Super) announced that they have entered into a binding agreement to sell their 100% interest in RetireAustralia to Invesco Real Estate (the global real estate arm of Invesco Ltd) for A$845 million.

Infratil and the NZ Super Fund each owned a 50% interest in RetireAustralia (both shareholders’ interests managed by Morrison, a global infrastructure investment manager).

RetireAustralia is a privately-held retirement operator in Australia with 4,000 independent living units and apartments across 27 villages in three states (New South Wales, Queensland and South Australia).

The sale is conditional, including FIRB (Foreign Investment in Australia) approval, and is expected to complete in the last quarter of the 2025 calendar year.

Infratil expects to receive proceeds of approximately A$300 million (NZ$328 million), after adjustments for transaction and completion costs.

The sale is expected to result in an accounting loss of NZ$80 million – the difference between Infratil’s 31 March 2025 carrying value of $404 million for RetireAustralia and the approximate NZ$328 proceeds, however when taking into account capital contributed and distributions received the forecast sale proceeds are expected to preserve almost all contributed capital, with an internal rate of return (IRR) close to zero over the 11 year holding period.

The sale also marks the end of Infratil’s interests in the retirement sector which began when it bought a 19.91% stake in Metlifecare at $3.53 per share in 2013. 

It later sold the Metlifecare stake in 2017 at $5.61 per share.

Infratil has a market capitalisation that exceeds NZ$11 billion and is seen to have grown out of its smaller investments.

The company continued to have a positive outlook for RetireAustralia, but the Infratil team found it increasingly difficult to justify an investment of RetireAustralia’s size as able to deliver a meaningful return to Infratil shareholders.

Infratil’s decision to sell RetireAustralia is consistent with its strategy to divest businesses, unlikely to scale under its ownership, and the funds increase balance sheet flexibility for reinvestment. 

Infratil is working towards a $1 billion divestment target so it is inevitable that there will be other assets, with limited scalability, sold in due course (potentially a part of a larger investment such as a One NZ asset, or the sale of its 66% shareholding in Wellington Airport).

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Travel

Our advisors will be in the following locations on the dates below.

20 August – New Plymouth – David Colman

21 August – Wairarapa – Fraser Hunter

22 August – Lower Hutt – David Colman

28 August – Christchurch – Fraser Hunter

Please contact us if you wish to make an appointment.

David Colman

Chris Lee & Partners Limited