Robust office market conditions benefit AMP NZ Office TrustFebruary 1, 2006 New Zealand’s largest listed investor in prime commercial office property, AMP NZ Office Trust (ANZO), continues to benefit from a robust commercial office market. ANZO’s portfolio continues to perform well, reporting strong growth in rentals, significant leasing success and solid increases in both net operating surplus (up four percent) and unit-holder distributions (up 2.8 percent). Commenting on the financial results for the six months to December 31, 2005, executive manager Robert Lang said: “ANZO’s portfolio is responding favourably to strong market conditions.” ANZO’s net surplus for the interim period was $17.1 million*, with rental revenues having increased 6.2 percent to $46.1 million. Growth in rental income was a function of a part-period contribution from Wellington’s Mayfair House (acquired September 2005), a full period’s contribution from the successfully refurbished Pastoral House, strong rent review results and improved occupancy levels, particularly in ANZ Centre (99 percent), IAG House (100 percent) and Pastoral House (99 percent). Demand across ANZO’s prime portfolio continues to be strong, with 42 new leases and renewals executed in the period and importantly, 21 of these being new tenants to the portfolio. Existing tenant retention during the period was in excess of 92 percent. ANZO’s total portfolio occupancy is 99 percent and the weighted average lease term is 6.2 years. The level of portfolio under-renting and growth in market rentals is providing ANZO with strong rent review outcomes and high quality potential for further revenue growth. “These factors assure strong cash flows and underpin the quality of ANZO’s future earnings growth and distributions to investors,” said Mr Lang. Emphasising ANZO’s leasing successes of the six months, Mr Lang said that the new leases and renewals secured covered in excess of 32,000 sqm of floorspace (this represents by comparison the average volume of annual leasing activity over the past three years). In addition, a proactive focus on future lease expiries has resulted in a significantly reduced level of expiry risk with less than 7.3 percent of ANZO’s net lettable area expiring in any one of the next three financial years. In Auckland’s Quay Tower, a series of new leases and lease renewals has absorbed all of the space which is due to be vacated by Air New Zealand in 2007. Twenty-six rent reviews were completed, resulting in an average increase in net rent of 15.5 percent. ANZO’s $30 million redevelopment project at No. 1 and 3 The Terrace in Wellington, where a low-rise annex is under construction, is now more than 70 percent complete and on schedule for opening in May. The acquisition of Mayfair House for $29.3 million has performed in line with expectations and represents a valuable addition to the portfolio. The building is 100 percent occupied, primarily by Government tenants, and is returning an initial yield of 9.0 percent on the purchase price. Mr Lang said: “ANZO’s total direct expenses increased by 2.9 percent on a like-for-like basis, adjusting for the inclusion of Mayfair House, Pastoral House and leasing fees which were higher due to the significant amount of leasing activity across the portfolio.” Unit-holders will receive a second-quarter distribution of 1.85 cents per unit, bringing total distributions for the six months to 3.70 cents per unit, a 2.8 percent increase. The record date is 16 February 2006 and the payment date is 23 February 2006. Following ANZO’s unit purchase plan in September 2005 and institutional placement of December 2004, which together raised $45 million of additional capital, ANZO’s balance sheet is in a very strong position to pursue growth opportunities to further enhance unit-holder returns. ANZO’s gearing ratio at December 31, 2005 was 33.2 percent, comfortably below the self-imposed 40 percent limit and 50 percent limit contained in the trust deed. ANZO has an active strategy in respect to managing interest rates on its borrowings. Currently 89 percent of borrowings are fixed for an average duration of 5.4 years. This strategy has ensured that the strong underlying performance of the portfolio has, and will continue to, benefit ANZO unit-holders. The achievements of the first six months position ANZO strongly to capture market growth and investment opportunities during the balance of the financial year. Market activity continues to be high and the most probable outcome is that ANZO will shortly be the only NZX-listed investor exclusively focused on investing in commercial office property in New Zealand. ANZO is managed by AMP Multiplex Management Limited. About ANZOANZO is New Zealand’s largest listed investor in premium and A-grade commercial office property. A unit trust listed on the New Zealand Exchange, ANZO currently owns 11 New Zealand office buildings with a total gross value of more than $879.1 million – Auckland’s PricewaterhouseCoopers Tower, ANZ Centre, IAG House and Quay Tower; and Wellington’s State Insurance Tower, Mobil on the Park, HP Tower, 125 The Terrace, No. 1 and 3 The Terrace, Pastoral House and Mayfair House. * ANZO’s net surplus after taxation and before unrealised development margin was $17.1 million, a 4.0 percent increase on the previous comparable period. When the unrealised development margin on the No. 1 and 3 The Terrace project in Wellington is included, the net surplus rises further to $17.9 million, a 9.0 percent increase. Media enquiries: |