AMP NZ Office Trust 2001 Interim ResultFebruary 16, 2001 AMP New Zealand Office Trust is pleased to announce its 2000/2001 interim result, covering the six-month period to 31 December 2000. The highlights of the interim result are:
Net Surplus of $16.86 millionWhile office property investment markets continue to remain challenging, the benefits of exposure to premium quality CBD office property have underpinned a resilient net surplus of $16.86 million. Portfolio operating revenues and expenses remained steady in comparison to the interim result recorded in the previous year. This is attributed to the portfolio’s fully leased status, long weighted average lease term and management’s focus on operating expenses. Portfolio Value MaintainedThe Trust’s policy is to undertake full property re-valuations at its financial year-end date of 30 June. Hence, the portfolio of properties was not re-valued during the period. Net asset backing on a fully diluted basis has been maintained at 87.8 cents per unit. DistributionsAs a result of the net surplus, the Manager is pleased to announce an interim un-imputed distribution of 3.50 cents per unit. This is unchanged in comparison to the previous interim result. The distribution is in accordance with the Trust’s policy of distributing most of its available net surplus, and will paid in early March. Portfolio Operations OverviewPortfolio activity during the interim period has continued to focus on active asset management, implementation of strategic initiatives, optimisation of occupancy levels, cash flows and profitability. Specifically, the Trust has introduced a comprehensive tenant relationships programme. This initiative has already delivered on some of the anticipated benefits as evinced by the recent execution of several new leasing agreements to major national and international companies. In addition, several existing tenants have renewed or renegotiated their existing leases. This has directly contributed to the portfolio occupancy remaining at 100% for the period. The results of fifteen rent reviews undertaken and completed by the Trust during the period were pleasing and generally ahead of management expectations. The construction of PricewaterhouseCoopers Tower is progressing according to programme and is on schedule for completion in May 2002. The 2000 Annual Report highlighted that legal proceedings had been filed against Auckland City Council and the Trust. These proceedings sought a Court order quashing the resource consent in granted by Auckland City Council in respect of PricewaterhouseCoopers Tower. As Manager, we are pleased to report that these proceedings were withdrawn in October 2000 and that no other legal challenges exist. The settlement for the sale of the Wellington Parkroyal Hotel has moved a significant step closer with the subdivision resource consent approved by Wellington City Council. The sale represents a key part of the Trust’s strategy to consolidate is strategy as a prime commercial office property investor. Settlement is expected to occur around the middle of the year. Looking ForwardThe performance of New Zealand’s principal economic indicators continues to improve. In particular, the export and tourism sectors are strong, while the New Zealand dollar remains relatively low – notwithstanding its recent increases. Business confidence is strengthening, interest rates have fallen and consumer optimism is in the ascendancy. While these positive economic indicators provide encouragement they have not yet had a material impact on New Zealand office markets. The office markets in both Wellington and Auckland continue to be more responsive to sector specific supply and demand dynamics. Generally, conditions in the Auckland CBD office market have remained unchanged over the last six months. The secondary quality office market remains very demanding as tenants continue to upgrade to prime quality accommodation. Vacancy in the secondary category is currently 17.1%. The prime quality office market remains comparatively robust with demand (net absorption) increasing over the past six months. Vacancy in this category is currently 14.0%. In Wellington the increasing strength in the office market is still evident. The latest vacancy statistics show that the prime quality CBD vacancy rate has reduced during the past six months from 10.2% to 6.3% or only 12,100 square metres. Vacancy in the secondary quality category is also relatively low at 6.3%. It is our perception that the CBD office market’s prospects are healthier now than they were six months ago as a result of a stronger than anticipated economic turn-around. While this is still export sector focused, its increasing diffusion through the domestic economy augers well for property over the coming year. The Trust’s high occupancy rate and high quality office properties ensure that it is well positioned to benefit from the anticipated improvement in market conditions. The record date for the interim distribution is the 2 March followed by the ex date on the 9 March 2001. Robert Lang |