AMP NZ Office Trust to deliver record distribution to investorsApril 14, 2008 New Zealand’s largest listed investor in prime commercial office property, AMP NZ Office Trust (ANZO), has announced a record distribution to unit-holders on the back of continued strong portfolio performance. ANZO chief executive Robert Lang said the record distribution comes on top of a previously-announced distribution upgrade and means ANZO’s gross unit-holder distributions for the full year to 30 June 2008 will be 8.0 percent higher than in 2007. The revised full-year gross distribution of 8.385 cents per unit will be ANZO’s highest-ever distribution derived from operating earnings. The 8.0 percent increase consists of the 4 percent year-on-year growth signalled in December 2007, plus a special distribution, also 4 percent. The additional 4 percent will be spread evenly across ANZO’s upcoming third- and fourth-quarter distribution payments to investors. Mr Lang said ANZO’s portfolio occupancy remains consistently high, while rent reviews and previous acquisitions were contributing strongly. The outlook for next year’s distribution is also favourable, with an expected minimum year-on-year growth rate of 4 percent. “However, with continued portfolio performance at this level, there are good prospects that this will again be exceeded.” Commenting on ANZO’s financial results for the nine months to 31 March 2008, Mr Lang said net operating profit after tax (ANZO’s distributable profit) was 32.7 percent higher than the previous comparable period, at $40.11 million. Rental revenues were up 13.9 percent or $10.95 million to $89.53 million. Earnings per unit for the nine months (based on operating profit before current taxation), were 5.8 percent higher at 6.43 cents per unit. After-tax earnings per unit were 5.83 cents (this is not directly comparable with the previous corresponding period as ANZO has become a taxpayer for the first time this year). ANZO unit-holders will receive a net third-quarter cash distribution of 1.957 cents per unit plus a 0.226 cents per unit imputation credit. The registered record date is 29 April 2008 and payment will be made on 8 May 2008. Mr Lang said rent reviews, new leases and lease renewals completed during the year to date have delivered an annualised increase in contract rentals of $5.04 million, with the full benefit to be reflected in the next financial year. Thirty-three new leases and lease renewals have been secured so far. Forty-six of the 73 rent reviews scheduled in the current financial year have been completed, resulting in an average increase in contract net rents of 26.0 percent. The balance of the reviews, covering 30,200sqm of an original total of 69,540sqm, will be completed over the coming months. In addition, almost 28 percent or 67,400sqm of the portfolio’s net lettable area is subject to review in the next financial year. Mr Lang said with portfolio under-renting exceeding 12.5 percent ANZO’s attractive rent review profile provides a strong organic earnings growth platform, underpinning future distributions and returns to investors. Portfolio occupancy was 99 percent as at the end of March, with a portfolio weighted average lease term (WALT) of 4.64 years. The acquisition of 29 Willis Street in Wellington, a newly-built $77 million office and retail complex with 100 percent of the office space occupied by a Government tenant, is scheduled to settle next month. Meanwhile, the redevelopment of 21 Queen Street in Auckland is progressing well and is on track to be to be one of Auckland’s first five-star green buildings when complete in mid-2009. ANZO purchased this property in response to growing demand for A-grade and prime office space and a shortage of quality supply. ANZO recently extended its bank debt facility by $160 million to a total of $485 million to cover all currently-committed portfolio and capital expenditure. This facility does not expire until October 2009. ANZO’s bank gearing (bank debt to total assets) at 31 March 2008 was 23.1 percent and will reach approximately 26.1 percent following settlement of 29 Willis Street – both well below the self-imposed ceiling of 40 percent. As at the end of March, 86.9 percent of ANZO’s total bank debt was hedged through interest rate swaps for an average duration of more than five years. ANZO’s interest rate swap portfolio is not exposed to any swap maturities or unhedged swap maturities in the next 12 months. In addition, no more than 25 percent of ANZO debt cover matures in any 12-month period for the next four years. The annual revaluation of ANZO’s portfolio is currently underway, with the outcome of this to be communicated in June. ANZO is managed by AMP Haumi Management Limited.
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