AMP NZ Office Trust delivers sharp full-year performance

August 3, 2006

New Zealand’s largest listed investor in prime commercial office property, AMP NZ Office Trust (ANZO), says an active year on all fronts – leasing, rent reviews, acquisitions and development projects – has resulted in a 4.4 percent increase in net profit before revaluations and 20.9 percent increase in total assets.

Announcing ANZO’s results for the full year to June 30, 2006, executive manager Robert Lang said unit-holders will receive a total distribution for the year of 7.464 cents per unit (2005: 7.30 cpu).

The total return to ANZO’s unit-holders (income yield plus unit price appreciation) was 29.2 percent – the second consecutive year that total returns have exceeded 20 percent.

ANZO’s net profit after taxation and before revaluations was $36 million (2005: $34.5 million). The net profit after revaluations rises to $156.1 million when an unrealised revaluation gain of $120.1 million is taken into account.

Mr Lang said the results were achieved on the back of an 8.6 percent increase in rental revenues to a record $95.7 million, reflecting improved occupancy across the portfolio, higher rentals following rent reviews, and contributions from the refurbished Pastoral House, redeveloped No. 1 The Terrace, as well as Mayfair House, which was acquired during the year.

“The robust performances recorded during the year are testament to ANZO’s investment strategy, high-quality investment portfolio and distinctive market leadership position, which collectively have enabled it to capture and optimise the opportunities in a strong New Zealand office market,” said Mr Lang.

The increase in rentals and outlook for further growth underpinned a $126.5 million or 14.2 percent portfolio revaluation gain for the year – the strongest since ANZO was listed in 1997 – which took the total portfolio value to more than $1 billion. Net tangible assets per unit (NTA) rose 20.5 percent from $1.00 to $1.21 per unit.

ANZO’s gearing ratio at year-end was 30.0 percent, well below the self-imposed 40 percent limit and the 50 percent limit contained in the trust deed.

Mr Lang said ANZO’s portfolio occupancy had been maintained at 99 percent for the second half of the year, a significant step up from the June 30, 2005 position of 95.1 percent. Six of ANZO’s 11 properties are fully occupied.

Other highlights of the year included:

  • The acquisition of Mayfair House in September 2005 for $29.7 million. This property, which is 100 percent occupied, primarily by Government tenants, was valued at $35.3 million at year-end, representing a total return of 26.2 percent for the nine-month period.
  • Practical completion was achieved on the two-and-a-half-year, $33.1 million redevelopment of No. 1 The Terrace. The yield on cost is 9 percent, while the development margin is forecast to be 23.9 percent. The project was ANZO’s second Wellington redevelopment project in the past two years, following the refurbishment of Pastoral House.
  • A total of 51 new leases and lease renewals were secured during the year, accounting for more than 38,331 sqm or 17.5 percent of the net lettable area of ANZO’s portfolio. This is a record level of leasing and is the fourth consecutive year that more than 30,000 sqm has been leased. ANZO‘s portfolio tenant retention rate for the year was more than 93 percent and 22 new tenants joined the portfolio. The portfolio weighted average lease term is an attractive 5.7 years.
  • A total of twenty-eight rent reviews were undertaken delivering an average increase in rents of 15.6 percent over the two- and three-year periods of the reviews.
  • The implementation of ANZO’s unit purchase plan in August and September 2005 saw approximately 65 percent of ANZO’s unit-holders take advantage of the opportunity to invest up to $5,000, raising $15.7 million.

Mr Lang said he and the Board anticipate continuing growth in New Zealand office markets. “ANZO has excellent potential for revenue gains, with passing rentals in the portfolio presently 6.8 percent below market levels, and 56.5 percent of the portfolio net lettable area is subject to rent review over the next two years. In addition, ANZO’s portfolio has a low level of lease expiry over the next three years. This, along with historically-low market vacancy levels, should ensure continued earnings and distribution growth.”

ANZO is a strong position to continue to grow distributions because the distribution reserve, established to maintain stability and growth of future distributions, now contains $5.7 million or 1.19 cents per unit. In addition, ANZO has 87.6 percent of its bank debt hedged at a fixed rate for an average term of 4.9 years, substantially reducing interest rate volatility and its potential negative impact on earnings.

ANZO’s unit-holders will receive a fourth-quarter distribution of 1.884 cents per unit (2005: 1.850 cpu). The record date is August 17, 2006 and the payment date is August 24, 2006.

ANZO has adopted the new NZ IFRS accounting standards from the beginning of its 2007 financial year on July 1, 2006, the first of New Zealand’s listed property vehicles to do so. Future financial results will be reported in accordance with NZ IFRS.

ANZO is New Zealand’s only listed investor exclusively focussed on commercial office property.

About ANZO

ANZO is managed by AMP Multiplex Management Limited. 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 11 New Zealand office buildings with a total gross value of more than $1 billion – Auckland’s PricewaterhouseCoopers Tower, ANZ Centre, IAG House and Quay Tower; 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 and Mayfair House.

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