AMP NZ Office Trust acquires Wellington’s Deloitte House for $57.42 millionMarch 16, 2007 New Zealand’s largest listed investor in prime commercial office property, AMP NZ Office Trust (ANZO), has expanded its Wellington portfolio for the second time in the space of three months, acquiring Deloitte House for $57.42 million in an off-market transaction. ANZO executive manager Rob Lang said Deloitte House represents a rare opportunity to acquire a prime waterfront office building in a market experiencing strong growth. The investment performance outlook for this property is excellent with the three year average total return expected to exceed 14 percent per annum. A 17-storey office building, Deloitte House has recently been fully refurbished and redeveloped to an A-grade standard. The building is 90 percent occupied, with strong blue chip and quasi government tenants, and has a weighted average lease term of 6.0 years. Several new leases have recently been signed in the building, reflecting the current demand for high quality space. This demand is expected to continue and drive the building’s occupancy higher. The property’s initial twelve-month running yield is 6.75 percent and is expected to exceed 8.0 percent within three years. “ANZO has a number of opportunities to improve the initial yield – along with leasing the vacant space, we estimate that the occupied areas of Deloitte House are 23.7 percent under-rented,” said Mr Lang. He said a number of pending rent reviews underpin the near-term rental and capital value growth prospects. Approximately seventy-five percent of the building’s net lettable area is subject to rent review in late 2008 and early 2009. Mr Lang re-confirmed that ANZO’s projected distribution for the full year to June 30, 2007 is now 7.76 cents per unit, representing a 4 percent increase over the 2006 financial year. “The Board continues to monitor ANZO’s performance and a similar increase in distributions in the 2008 financial year is certainly possible.” Deloitte House has been independently valued by Colliers International at $57.25 million, adopting a market capitalisation rate of 7.25 percent. Included in the acquisition price is a $1.52 million income support allowance from the vendor that will support the property’s yield during the next three years. The acquisition will increase total assets in ANZO by 5.3 percent from $1,075.1 million to $1,132.5 million. ANZO’s exposure to the favoured Wellington market will increase from 48.8 percent to 51.4 percent of the portfolio value. ANZO is acquiring the 100 percent leasehold interest in Deloitte House, with the Wellington City Council as lessor. The purchase will initially be funded from a combination of bank debt and the proceeds of ANZO’s unit purchase plan (UPP), which was completed in February this year and raised $19.5 million. Mr Lang said the investment market remains active at present and ANZO continues to investigate new opportunities to grow the portfolio and enhance unit holder returns. Settlement is scheduled for 23 March 2007. The Deloitte House acquisition follows the $39.5 million acquisition of Wellington’s AXA Centre in December 2006, and is ANZO’s sixth acquisition since 2003. The acquisitions, in combination with development projects and growth in capital values, have taken ANZO’s total portfolio value from $578 million in December 2003 to more than $1 billion. Further detail on Deloitte House is provided below. 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 12 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, Mayfair House and AXA Centre. Media enquiries: Deloitte House
ANZO’s portfolioFollowing the acquisition:
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