AMP NZ Office Trust achieves 54.4 percent increase in first-quarter distributable profitNovember 1, 2007 New Zealand’s largest listed investor in prime commercial property, AMP NZ Office Trust (ANZO), has achieved an increase of more than 50 percent in net operating profit after tax (the distributable profit) for the first quarter of its 2008 financial year. ANZO chief executive Robert Lang said ANZO’s net operating profit after tax (the distributable profit) for the three months to September 30, 2007 was $13.9 million, representing a 54.4 percent increase on the previous comparable period. “This was driven by strong rental revenue growth and contributions from recent acquisitions, which was up 14.1 percent or $3.58 million to $28.9 milion for the quarter. “ANZO’s interest expenses were also 23.3 percent lower, due to the conversion of the interest-bearing mandatory convertible notes (MCNs) into ordinary units at the end of June 2007, and lower average debt levels,” said Mr Lang. ANZO’s gearing currently stands at 22.4 percent, with 91.6 percent of its bank debt hedged. Earnings per unit for the quarter (based on distributable profit), were 8.0 percent higher at 2.02 cents per unit. ANZO has become a taxpayer for the first time this year (until this point, deductions and tax losses carried forward from previous years have offset ANZO’s tax liability), meaning the trust now reports and distributes after-tax operating profits. Unit-holders will receive a net cash distribution of 1.787 cents per unit plus a 0.203 cents per unit imputation credit, representing a 5.25 percent increase in the gross distribution per unit in comparison to the previous corresponding period. This will be ANZO’s first distribution payment under the Portfolio Investment Entity (PIE) regime, which significantly reduces the tax paid on returns by the majority of New Zealand unitholders, in that cash distributions do not incur any additional tax. The record date is November 15, 2007 and payment will be made on November 22. Mr Lang said ANZO had secured a $2.1 million annualised uplift in contract rentals during the first quarter as a result of rent reviews, new leases and lease renewals, underpinned by robust demand for high-quality office space. Twenty-three rent reviews, covering 16,140 sqm of office space, delivered an average increase of 32.0 percent. A further 53,487 sqm is subject to rent review during the remainder of the financial year and Mr Lang pointed out that ANZO’s portfolio was 12.5 percent under-rented as at June 30. Eighteen new leases and lease renewals were agreed during the quarter, resulting in a 22.7 percent average uplift in rent from previous contract levels. “This financial year, 35 percent of ANZO’s portfolio net lettable area is subject to a rent review evemt and an increase to new market rent levels – which is positive for investors in times of rising rents. A futher 30 percent will follow in the 2009 financial year. “This means ANZO has about three years of solid revenue growth, and if growth in market rentals continues, under-renting will continue to be a feature of the portfolio for four to five years.” Mr Lang said resource consent is expected shortly for ANZO’s development at 21 Queen Street, which is on track to be one of Auckland’s first five-star green buildings on completion in August 2009. Interest from prospective tenants has been strong. ANZO is managed by AMP Multiplex Management Limited.
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