AMP NZ Office Trust to carry out institutional placement of up to
$70 million

April 18, 2007

New Zealand’s largest listed investor in prime commercial office property, AMP NZ Office Trust (ANZO) has announced an institutional placement of up to $70 million on the back of continued strong portfolio performance and solid growth prospects.

ANZO last week reported a 12.9 percent increase in operating profit before taxation (its distributable profit) for the three months to March 31, 2007.  Earnings per unit on the same basis were up 8.0 percent.

At the same time, ANZO also announced its largest-ever annual portfolio revaluation gain of $253 million 1, double that of last year and representing a 22.7 percent increase over the 12 months. In combination with the recent acquisition of Auckland’s 21 Queen Street, the revaluation is expected to lead to a total portfolio value as at 30 June 2007 of more than $1.40 billion.

The revaluation is expected to lift ANZO’s net tangible assets (NTA) per unit under NZ IFRS by 23.1 percent, from $1.08 to approximately $1.33.  Adjusted NTA (i.e. after excluding deferred tax on revaluation gains) is expected to be up from $1.13 to approximately $1.48.

ANZO executive manager Rob Lang said the placement is a value-enhancing capital management initiative which will have a positive impact on after tax earnings in the current year and beyond by allowing ANZO to retire some comparatively-expensive debt.

It will also give ANZO a stronger balance sheet and increased capacity for future growth.  The placement will reduce ANZO’s gearing (excluding the mandatory convertible notes, which are due to convert on 30 June 2007) from approximately 28 percent to approximately 23.3 percent, providing ANZO with approximately $320 million of bank debt capacity for futher investment (after allowing for the 21 Queen Street redevelopment).

ANZO’s interest rate exposure will also be reduced significantly – following the placement and settlement of 21 Queen Street, 85 percent of ANZO’s bank debt will be hedged for an average of five years.  Mr Lang said that this will provide better certainty around future earnings and investor returns.

The placement is expected to improve ANZO’s free float, market capitalisation, trading liquidity and position in the NZX50 index while at the same time further improve the prospects of inclusion in other major international stock indices.

ANZO completed a unit purchase plan (UPP) in February this year, raising $19.5 million.  Mr Lang said that no further UPP can be implemented at this time due to legislative constraints, which in practice limit UPPs to one every twelve months.

As part of this capital management initiative a unit-holder meeting is scheduled to be held in Wellington in May to ratify this placement and ANZO’s previous placement in December last year.

The placement, consisting of approximately 52.2 million units, will be carried out over the next two days, with trading in ANZO units halted during the placement process. The placement is being undertaken at a fixed price of $1.34 per unit, representing a small premium to NTA and a modest discount to the recent trading market price of ANZO’s units.  Settlement is expected to take place on April 24.

The new units will be entitled to ANZO’s third-quarter distribution of 1.99 cents per unit, which will be paid on May 18, and will be tradeable following settlement.

The placement, which is not underwritten, is being managed by First NZ Capital and Macquarie Securities (New Zealand) Limited.

Mr Lang said ANZO’s earnings outlook was underpinned by solid market fundamentals, including vacancy rates at historic lows, strong tenant demand and a shortage of quality space.  These conditions were driving strong rental growth prospects, with passing contract rents across the portfolio now 12.5 percent below market levels.

To date this financial year, ANZO has completed 29 rent reviews over 27,600 sqm of net lettable area, recording an average increase in contract rents of 26.1 percent over the mostly three-year review periods.

A further 35 rent reviews over an area of 27,000 sqm are scheduled for the balance of this financial year, with 65,000 sqm to follow in the 2008 financial year and 67,000 sqm the year after.

ANZO’s projected distribution for the full year to June 30, 2007 was upgraded in December last year, taking the distribution to 7.76 cents per unit, a 4 percent increase over the 2006 financial year.  In addition, the expected minimum year-on-year growth in future distributions also increased to 2.5 percent from 2.25 percent.  At the time, Mr Lang also noted that a similar increase in distributions in the 2008 financial year is possible.

After-tax returns to ANZO’s investors are also expected to improve later this year as a result of last year’s positive changes to the investment taxation regime.  ANZO currently intends to elect to become a portfolio investment entity (PIE) from October 1, 2007 and ANZO’s investors are expected to see an immediate increase in the net distributions they receive after this election.

Other recent highlights have included the acquisition of Deloitte House for $57.42 million and 21 Queen Street for $33.38 million (with settlement to take place on May 4).  ANZO intends to invest an estimated $60 to $70 million of additional capital redeveloping this property to a prime quality.

ANZO’s portfolio occupancy is 99.0 percent, and the weighted average lease term as at June 30 will be 5.1 years. ANZO is managed by AMP Multiplex Management Limited.

About ANZO
ANZO 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 14 New Zealand office buildings with a total gross value of more than $1.4 billion – Auckland’s PricewaterhouseCoopers Tower, ANZ Centre, IAG House, Quay Tower and 21 Queen Street; and Wellington’s State Insurance Tower, Vodafone on the Quay (formerly Mobil on the Park), HP Tower, 125 The Terrace, No. 1 and 3 The Terrace, Pastoral House, Mayfair House, AXA Centre and Deloitte House.

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Media enquiries:
Robert Lang
Executive Manager
AMP NZ Office Trust
Office: 04-494 2268
Mobile: 029-494 2268
Email: robert.lang@anzo.co.nz