AMP NZ Office Trust announces
$253 million revaluation gain and higher third-quarter profit

April 12, 2007

New Zealand’s largest listed investor in prime commercial office property, AMP NZ Office Trust (ANZO) has today announced its largest-ever annual portfolio revaluation gain of $253 million 1, along with its financial results for the nine months to March.

ANZO executive manager Robert Lang said that in dollar terms, the $253 million revaluation gain was double that of last year – which was itself a record – and equated to a 22.7 percent increase.  This is expected to result in the value of ANZO’s investment portfolio increasing to $1.37 billion as at the end of its financial year on 30 June 2007.

In addition, Mr Lang said the recent acquisition of Auckland’s 21 Queen Street for $33.38 million is scheduled to settle on May 4 and will be carried in ANZO’s year-end financial accounts at acquisition cost, with a substantial redevelopment project to begin post-balance date. In the meantime, the acquisition in combination with ANZO’s existing properties is expected to lead to a total portfolio value as at 30 June 2007 in excess of $1.40 billion.

ANZO’s net tangible assets (NTA) per unit under NZ IFRS will increase from $1.08 to approximately $1.33 as a result of the revaluation, with adjusted NTA (after excluding deferred tax on revaluation gains) up from $1.13 to approximately $1.48.

“The strong performance of the revaluations is a resounding endorsement of ANZO’s strategy of focusing on the higher-quality end of the market, which continues to deliver benefits for investors,” Mr Lang commented. He said key drivers for the revaluation gain were:

• Significant compression in capitalisation rates: ANZO’s portfolio weighted average capitalisation rate is now 6.9 percent, 82 basis points firmer than last year, and is a reflection of the strong demand from both local and offshore investors for high-quality, well-located assets.  This demand is representative of a global trend which has led to aggregate yield compression of over 50 basis points in North America, 65 basis points in Europe and almost 100 basis points in Asia Pacific 2.
• Rising market rents (up more than 9 percent in ANZO’s portfolio).  Market rent growth has been underpinned by solid market fundamentals including vacancy rates at historic lows, strong tenant demand  and a shortage of quality space, and
• Higher contract net income across ANZO’s portfolio, as a result of higher occupancy and the outcomes of rent reviews.  To date this financial year, ANZO has completed 29 rent reviews over 27,600  sqm of net lettable area, recording an average increase in contract rents of 26.1 percent over the mostly three-year review periods.

Passing contract rents across the portfolio are now 12.5 percent below market levels, underpinning ANZO’s future valuation performance and positioning ANZO strongly for further rental and earnings growth.  A further 35 rent reviews over an area of 27,000 sqm are scheduled for the balance of this financial year, with 65,000 sqm to follow in the 2008 financial year and 67,000 sqm the year after.

Mr Lang said eight of the 14 properties in the portfolio showed valuation gains of more than 20 percent, and ANZO’s acquisitions and developments had been among the top performers (for full analysis, see table below):

• Wellington’s AXA Centre, acquired by ANZO in December 2006, has appreciated in value by 5.9 percent in just six months and is expected to deliver a total return for the period in excess of 13.1 percent
• Pastoral House, also in Wellington, which ANZO acquired and refurbished to A-grade quality at a total cost of $38.4 million in 2005, is now valued at $62 million
• The State Insurance Tower and Vodafone on the Quay, which ANZO bought in mid-2004 for a combined total of $146 million, are now together worth $239 million
• The largest individual gain in dollar terms again came from Auckland’s PricewaterhouseCoopers Tower, rising $54.6 million to $271 million during the year, compared with its development cost in 2002 of $147 million.

Portfolio occupancy is 99.0 percent, and the weighted average lease term as at June 30 will be 5.01 years. Following the revaluations ANZO’s gearing (bank debt to total assets) as at 30 June 2007 is forecast to be approximately 28 percent.

The revaluation forms part of ANZO’s statutory reporting requirements, is subject to audit and will be confirmed as part of ANZO’s 30 June 2007 year-end financial results, which will be announced in early August 2007.

Third-quarter financial results
Commenting on ANZO’s performance for the nine months to March 31, 2007, Mr Lang said the current financial year is showing the benefit of investing in assets enjoying the strongest tenant demand and therefore rental growth.  In addition, the rental contributions from three new acquisitions – Wellington’s Mayfair House, AXA Centre and Deloitte House – along with the No. 1 The Terrace development project, which was completed in May 2006 are also having a positive impact on cash flows.

Rental revenue for the nine months was up 12.2 percent to $78.6 million.

ANZO’s operating profit before taxation (its distributable profit) was 12.9 percent higher than the previous corresponding period, at $30.2 million.  Similarly, earnings per unit, based on ANZO’s operating profit before taxation, were up 8.0 percent to 6.08 cents per unit.

ANZO’s unit-holders will receive a third-quarter distribution of 1.99 cents per unit, which is 5.85 percent higher than last year’s third-quarter dividend.  The record date is May 11 and the payment date is May 18.

An upgrade in ANZO’s projected distribution for the full year to June 30, 2007 was announced in December last year, taking the distribution to 7.76 cents per unit, a 4 percent increase over the 2006 financial year.  In addition, the expected minimum year-on-year growth in future distributions also increased to 2.5 percent from 2.25 percent.  At the time, Mr Lang also noted that a similar increase in distributions in the 2008 financial year is possible.

After-tax returns to ANZO’s investors are also expected to improve later this year as a result of last year’s positive changes to the investment taxation regime.  ANZO currently intends to elect to become a portfolio investment entity (PIE) from October 1, 2007 and ANZO’s investors are expected to see an immediate increase in the net distributions they receive after this election.

Mr Lang said highlights of the third quarter included:

• The acquisition of Deloitte House for $57.42 million and 21 Queen Street for $33.38 million (with settlement to take place on May 4).  ANZO intends to invest an estimated $60 to $70 million of additional capital redeveloping this property to a prime quality. Further information on ANZO’s plans will follow in May
• The completion in February of a unit purchase plan (UPP), which raised $19.5 million and followed the institutional placement of units which took place in December last year.

“The revaluation gain and third quarter result announced today represents very positive news for investors in ANZO,” he said.  “Not only is the value of their assets and profits increasing but the prospect of further growth and higher investor returns remains strong.”

ANZO is managed by AMP Multiplex Management Limited.

1. Before deducting expected annual portfolio capital expenditure of $3.5 million
2. Global Real Estate Capital, Jones Lang LaSalle, 2007.

About ANZO
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 14 New Zealand office buildings with a total gross value of more than $1.4 billion – Auckland’s PricewaterhouseCoopers Tower, ANZ Centre, IAG House, Quay Tower and 21 Queen Street; 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, Mayfair House, AXA Centre and Deloitte 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

Valuations carried out by Colliers International and CB Richard Ellis.
*Ground lessors interest
**Acquired by ANZO in December 2006 – 2006 market value is acquisition cost
***Acquired by ANZO in March 2007– 2006 market value is acquisition cost
****Acquired by ANZO in March 2007, with settlement to take place in May 2007