A listed property investment trust today revealed that the rising cost of debt caused by the credit crunch meant that it was not able to hit its dividend target.

The AXA Property Trust, said the higher cost of financing due to rises in the European inter-bank offered rate (EURIBOR) meant it could only pay out a dividend of 4.25% a share, lower than its target of 5%.

Property investment trusts such as the Axa Trust, Resolutions UK Commercial Property Trust and ING’s UK real Estate Income Trust were set up to provide solid income streams for investors, and pay higher dividend yields than most listed property companies.

Stock Exchange
IIn his statement to the Stock Exchange accompanying the company’s final results for the year to 30 June, chairman Charles Hunter said: ‘While further interest rate hikes are no longer anticipated, financing costs remain higher than expected and are likely to diminish distributable income over the current year.’

Hunter said the listed property investment trust would rely on strong rental growth over the next year, as capital value growth continues to slow.

He said it had now largely completed its investment programme, and would look to take advantage of asset management opportunities to increase rental income.

The company reported a 1.1% increase in net asset value to 100p a share.