AMP NZ Office Trust completes Wellington project, delivers high returnsJuly 19, 2006 New Zealand’s largest listed investor in prime commercial office property, AMP NZ Office Trust (ANZO), has completed its second Wellington redevelopment project in two years and has confirmed that the returns are ahead of original expectations. ANZO executive manager Robert Lang said practical completion on the two-and-a-half-year redevelopment of No. 1 The Terrace was achieved recently, with the official opening scheduled for next month [August]. The yield on cost is 9.0 percent, while the development margin is a minimum of 22 percent and could improve further when project costs are finalised. The $33 million project has included the full interior refurbishment of No. 1 The Terrace and the construction of an adjoining low-rise annex at No. 3 The Terrace. The property is now valued at $76.1 million, benefiting from an improved valuation environment while the project took place, and was a contributor to ANZO’s recently-announced $126 million revaluation gain, which took the total portfolio value to more than $1 billion. Mr Lang said the strong project outcome had enhanced earnings and the net value of ANZO. The No. 1 The Terrace investment enjoys “prime” status amongst Wellington’s office buildings, has a strong Government tenant covenant and long 11.3 year weighted average lease term (WALT). In addition, growth in market rents while the project was carried out has meant that No.1 The Terrace is now 12 percent under-rented, providing strong prospects of future rental growth. The property is 96 percent occupied and its Government tenants are already enjoying the benefits of contemporary office accommodation – Treasury requires 31 percent less space and has significantly reduced its building energy costs, while the Ministry of Health has consolidated from four Wellington sites to two, resulting in less duplication, better communication and team integration, as well as reduced infrastructure and support costs. The Parliamentary Corporation has taken a 34-year lease for the two subterranean levels, which will be used primarily for select committee rooms. Mr Lang said that 41 percent of ANZO’s Wellington office portfolio was now occupied by Government tenants. ANZO’s recent revaluation had indicated that the Wellington portfolio was 9 percent under-rented. Collectively these illustrate the quality and strength of the future earnings potential from ANZO’s Wellington portfolio. Mr Lang said a key feature of the No. 1 The Terrace project was the link between the new low-rise annex and the existing building to create some of the largest CBD floor plates in New Zealand (2,100 sqm) – a move which anticipated tenant demand, particularly from the Government sector. “This is a great example of taking an existing property and an adjoining site and adding value to create a long-term prime asset,” said Mr Lang. The architectural integration between the new annex and the existing property had already drawn favourable comment, he said. The No. 1 and 3 The Terrace project follows the refurbishment of Pastoral House, which was completed in June last year and delivered a yield on cost of 11.2 percent and a refurbishment margin of 31.6 percent. Pastoral House is now 100 percent occupied, with the Ministry of Agriculture and Forestry (MAF) as major tenant. ANZO is managed by AMP Multiplex Management Limited. About ANZOANZO 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, Mobil on the Park, HP Tower, 125 The Terrace, No. 1 and 3 The Terrace, Pastoral House and Mayfair House. Media enquiries: |