AMP NZ Office Trust secures new tenants and leases seven full floorsJune 22, 2007 New Zealand’s largest listed investor in prime commercial office property, AMP NZ Office Trust (ANZO), says recent leases – including a total of seven full floors in three of its buildings – have helped to maintain a portfolio occupancy level of more than 98 percent 1 and will contribute to future earnings growth. Executive manager Robert Lang said the activity demonstrated tenant demand for quality premises and had added further momentum to growth in market rentals. “The rentals achieved will increase the net income of the relevant buildings, which will in turn have a positive flow-on effect throughout the portfolio and ANZO’s earnings in the coming financial year and further into the future,” said Mr Lang. He added that the new rentals also set a precedent for future leases and rent reviews, pointing out that ANZO’s portfolio is currently under-rented by more than 12.5 percent. New tenants have been secured well in advance for all of the space in Wellington’s Vodafone on the Quay which is due to to be vacated by existing tenant Mobil next year, following the relocation of a substantial portion of Mobil’s operations offshore. The recent leasings capped off a strong year of rewarding portfolio activity for ANZO. In the past 12 months, ANZO has completed 28 new leases over a total area of 12,260 sqm, with a further six lease renewals over an area of 8,000 sqm. Eight of ANZO’s 13 1 investment properties are now 100 percent occupied, and only two properties have a full floor available for lease. The percentage of ANZO’s portfolio area subject to scheduled lease expiries over the next 12 months has been reduced to 3.8 percent through pro-active management, enhancing the stability of ANZO’s cash flows. The recent leasing highlights include:
ANZO’s portfolio occupancy now stands at 98.1 percent, and the weighted average lease term as at June 30 will be 5.15 years. Commenting on rent reviews, Mr Lang said the 34 reviews carried out in the current financial year over a floor area of 41,000 sqm had delivered an average increase of 25.4 percent over the mostly two-and three-year terms. In addition, average increases of 20.7 percent had been achieved from the year’s six lease renewals. Mr Lang said more than half of ANZO’s total portfolio area will be subject to rent reviews over the next two financial years – 69,600 sqm (or 27 percent of net lettable area) in FY08 and 67,400 sqm (28 percent) in FY09. “Prime CBD office rents have shown exceptional growth over the past couple of years, increasing at a compound rate of more than 10 percent per annum, resulting in ANZO’s contract rents now being more than 12.5 percent below market levels. This level of under-renting positions ANZO’s portfolio strongly to capture market growth and continue to improve underlying earnings,” said Mr Lang. ANZO is managed by AMP Multiplex Management Limited.
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