ANZO announces first-quarter resultOctober 29, 2010 AMP NZ Office Trust (ANZO), which last week received investor approval for changes to its governance structure and management fee, has announced its result for the first quarter of its 2011 financial year. ANZO’s rental revenue for the three months to 30 September 2010 was $34.24 million, showing a 2.1 percent decrease from the previous corresponding period. Key differences in the rentals received during the two periods included the sale of five retail units in Wellington’s Chews Lane precinct in May this year, as well as the expiry of IAG’s lease at 151 Queen Street in late 2009. Due to the inclusion of 21 Queen Street as an investment property from 25 September 2009, interest costs for the quarter were 24.2 percent higher than the previous corresponding period, at $5.43 million. ANZO’s net operating profit after current taxation – the profit available for distribution to investors – for the quarter was down 5.8 percent to $15.14 million. Earnings per unit, based on operating profit after current taxation, were 5.6 percent lower at 1.52 cents per unit. ANZO is required under the New Zealand equivalents to International Financial Reporting Standards (NZ IFRS) to take into account a number of non-cash adjustments in reporting net profit. An unrealised loss on the fair value of ANZO’s interest rate swaps, along with deferred tax, means that ANZO has recorded a net profit for the quarter of $6.49 million, compared with a net profit of $14.69 million for the previous corresponding period. The result under NZ IFRS does not affect the profit available for distribution to investors. As part of the governance changes to ANZO, payment of the first-quarter distribution was brought forward and announced in late September. A net dividend of 1.474 cents per unit (or 1.675 cents on a gross basis) for the quarter was declared and has been paid earlier this week. ANZO’s balance sheet remains strong, with gearing at 23.1 percent – still one of the lowest in the New Zealand listed property sector – and interest cover of 4.09 times, both as at 30 September 2010. ANZO’s portfolio occupancy rate as at 30 September 2010 was 90.2 percent and has since increased to 90.8 percent as a result of leasing transactions during October. The portfolio weighted average lease term as at 30 September 2010 was 4.4 years. Three new customers have been secured – two of them in 21 Queen Street, lifting occupancy in that building from 10 to 24 percent. The three new leases are all for full floors, begin in early 2011 and represent combined annualised contract rentals of more than $925,000. They are as follows:
ANZO chief executive Scott Pritchard commented: “The property market remains challenging. Leasing enquiry levels are higher than they were at this time 12 months ago, which has resulted in three new lease transactions. “However, we are also conscious that from June next year ANZO will no longer have the ability to use depreciation as a deduction for tax purposes, which will have an impact on ANZO’s after-tax earnings of about 9 percent. From that point onwards, we are targeting stability in earnings, with the potential for increased performance once the property market starts recovering.” Commenting on the changes approved by ANZO’s investors last week, Mr Pritchard said the backdating of the new management fee structure to 1 July 2009 as agreed would result in ANZO’s manager, AMP Haumi Management Limited, rebating $1.12 million to the new company, AMP NZ Office Limited during November 2010. This covers the period from 1 July 2009 to 30 September 2010. Shares in the new company AMP NZ Office Limited will be issued and trading will commence on the NZSX on Monday 1 November. A separate announcement is being made regarding this process. About ANZO Scott Pritchard
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