AMP NZ Office Trust announces major initiatives to enhance performanceDecember 17, 2003 AMP Capital Investors (New Zealand) Limited, manager of AMP NZ Office Trust (ANZO), today announced a series of major initiatives that are expected to increase unit-holder value and enhance the overall performance of ANZO. The initiatives are the result of a comprehensive review of ANZO by AMP Capital that identified a number of strategic, capital management and operational opportunities to add value. The initiatives include:
“We are confident the initiatives will enhance unit-holder value while maintaining ANZO’s quality earnings and low risk profile,” said Catherine Savage, Managing director, AMP Capital. AMP Capital has also revised ANZO’s distribution forecasts and expects to distribute $0.07* per unit for the full financial year ending 30 June 2004. This represents a 4% increase compared with the previous year. AMP Capital believes the revised business plan will enable ANZO to deliver a sustainable 2.25% per annum distribution growth profile. AMP Capital intends to transfer ANZO management to joint venture companyAMP Capital has made a strategic decision to transfer the management of ANZO to a wholly-owned subsidiary. It then proposes to transfer 50% of that company to Ronin Property Group, subject to Ronin acquiring a cornerstone investment in ANZO. Ronin is an Australian specialist property funds management group. Ronin Property Group has significant management experience in the premium office market and has strong capabilities in both property and funds management. Ronin manages the Ronin Property Trust, a specialist office Trust, listed on the ASX with a market capitalisation of approximately A$1 billion. Ronin Property Group intends, in turn, to become ANZO’s largest unit-holder by acquiring a 30% holding in ANZO at a unit price of $0.87. It is proposed that the units will be purchased from National Provident Fund (NPF), which currently has a 37% holding in ANZO. On completion of the proposed transaction, NPF would hold a 7% stake in ANZO. “During the course of the review, NPF informed AMP Capital it wanted to diversify its property investments in the medium term and therefore was looking to reduce its holding in ANZO. This was factored into the review in order to enhance and protect value for all unit-holders,” said Ms Savage. Under the proposed arrangements, Ronin will commit to maintain a minimum holding of 19.9% of the units of ANZO for two years following the acquisition of units from NPF and 15% thereafter. It is also proposed that AMP Capital will have rights to acquire ANZO units from Ronin in the event Ronin wishes to sell more than 3% of ANZO’s units at any one time, in that initial two year period or wishes to sell its shares in the management company. AMP Capital has given today a ‘restricted transfer notice’ to NZX and ANZO in relation to its rights to acquire Ronin’s ANZO units, under the proposed arrangements. “Ronin’s intention to make a cornerstone investment in ANZO demonstrates its longterm commitment to ANZO and AMP Capital welcomes the significant property experience that Ronin would bring to the management of ANZO,” said Ms Savage. It is intended the name of the management company will be AMP Ronin Management Limited and that Rob Lang will continue in his current role as Executive Manager. Both AMP Capital and Ronin Property Group would be represented on the Board of the management company and AMP Capital would continue to provide local asset, administrative and support services to the manager. Ronin intends to purchase up to 5% of ANZO’s units following this announcement but will not enter into joint venture arrangements with AMP Capital or acquire further units from NPF until after the 15 Business Day ‘notice and pause’ period required by NZX’s Listing Rules and ANZO’s trust deed. Buy-backAs part of its capital management strategy and continued focus on returns to unit-holders, ANZO also intends to return approximately $62 million of capital to its investors through an off-market pro-rata unit buy-back in February 2004. The buy-back is subject to Trustee approval and confirmation from the IRD relating to the tax treatment of the buyback proceeds. All unit-holders will be invited to participate in the buy-back under which ANZO will offer to redeem one in seven units. The intended buy-back price is $0.87 cents, although this will be finally determined closer to the time. It is anticipated that the buy-back will result in ANZO’s gearing (Debt/Total Assets) moving from its present level of 20% to 31%. ANZO will also increase its self-imposed gearing threshold from 35% to 40%. This will provide ANZO with sufficient financial capacity and flexibility to execute its business plans, while remaining comfortably below the debt ceiling of 50% stated in ANZO’s trust deed. Broader approach to New Zealand property marketTo better position ANZO to maximise earnings growth, ANZO will pursue a broader range of investment opportunities within its existing commercial office investment policy. “ANZO will build on its existing activities and broaden its approach to New Zealand’s office property market. On a selective basis, we will take advantage of other office market investment opportunities in addition to continuing to pursue growth in the premium sector of the office property market,” said Rob Lang, Executive Manager, ANZO. Current activity includes the $27 million refurbishment and development of No 1 The Terrace. In addition, ANZO has submitted a tender to purchase Pastoral House, a - grade office property situated close to Wellington’s central government precinct. If successful, ANZO intends to refurbish the property to an A-grade standard. As part of the review process, all ANZO properties have been re-valued, resulting in an increase in the net asset backing per unit by approximately 0.2 cents to 90.0 cents. Distribution and other initiativesOther initiatives to be introduced as a result of the review, which as a package are intended to improve the overall of performance of ANZO include:
“AMP Capital is confident this package of initiatives, together with the continued strong tenant base and high level of occupancy, will provide benefits for all unit-holders and will see ANZO extremely well positioned for the future,” said Ms Savage. *It is intended that a 3.5 cent per unit distribution, be paid for the period to 31 December 2003 with the balance to be paid in quarterly distributions for the periods to March and June 2004. Contact: |