AMP NZ Office Trust reports double-digit growth in revenues and profitsFebruary 9, 2007 New Zealand’s largest listed investor in prime commercial office property, AMP NZ Office Trust (ANZO), has enjoyed double-digit growth in rental revenues and profits for the first half of its 2007 financial year. ANZO’s operating profit before taxation (its distributable profit) for the six months to December 31, 2006 was 10.3 percent higher than the previous corresponding period, at $18.87 million. Similarly, earnings per unit, based on ANZO’s operating profit before taxation, were up 7.7 percent to 3.90 cents per unit. ANZO executive manager Robert Lang commented: “ANZO’s continued strong portfolio performance and outlook were the catalyst for our December upgrade of projected investor distributions, for both the current year and the future. He added that in the 2006 calendar year, ANZO’s unit-holders had received a total return (income yield plus unit price appreciation) of 43.6 percent, higher than any other New Zealand listed property entity for that period. Mr Lang said ANZO’s interim financial result was achieved on the back of a 12.4 percent or $5.67 million gain in rental revenue, to $51.53 million. This was due to rent reviews, higher occupancy and the performance of new additions to the portfolio (two acquisitions – Wellington’s Mayfair House and AXA Centre – along with the No. 1 The Terrace development project, completed in May 2006). During the interim period ANZO completed 22 rent reviews over 23,300sqm of net lettable area, recording an average increase in contract rents of 28.1 percent over the mostly three-year review periods. 42 rent reviews over an area of 32,000sqm are scheduled for the balance of this financial year and a further 63,000sqm during the next financial year. The portfolio is under-rented by more than 7.0 percent, positioning ANZO strongly for further rental and earnings growth. Mr Lang said ANZO’s portfolio occupancy remains high, at 99.4 percent, with an attractive weighted average lease term (WALT) of 5.2 years. Twelve new tenants and twenty-three new leases and lease renewals over 13,150sqm were secured during the interim period. A tenant retention rate of 100 percent was achieved, with all tenants subject to lease expiries during the period remaining within ANZO’s portfolio. ANZO adopted the new New Zealand International Financial Reporting Standards (NZ IFRS) on July 1, 2006 (the commencement of the 2007 financial year) and this is ANZO’s first interim result prepared in accordance with the new standards. A detailed explanation of the changes relating to NZ IFRS and their effect on ANZO’s financial statements is available here ANZO’s unit-holders will receive a second-quarter distribution of 1.892 cents per unit, a 2.27 percent increase over the previous comparable period. The record date is February 23, 2007 and the payment date is March 2. Other highlights of the interim period included:
Gearing (bank debt to total assets) stands at 28.6 percent, giving ANZO approximately $195 million of bank debt capacity before reaching its self-imposed 40 percent ceiling. Mr Lang said that while ANZO’s strong portfolio and investment activities had underpinned the unit price performance, recent investor appetite for ANZO units had clearly been a response to the passing of the Taxation Bill late last year, which introduced new tax rules for collective investment vehicles that meet the definition of a portfolio investment entity (PIE). The new rules are expected to increase the net distributions received by investors and therefore the value of their investment. ANZO continues to study the new tax rules and at this stage expects to meet the criteria required to qualify as a PIE, which takes effect from October 1, 2007. Mr Lang said the outlook for ANZO’s full-year financial result is highly positive. “We expect earnings growth to be underpinned by further strong rent review performances and a high occupancy rate, which in turn will be supported by a low lease expiry profile and high tenant retention rate. We are excited about our recent acquisition of AXA Centre and the potential this has to further improve ANZO’s performance. Other acquisition opportunities continue to be investigated. “In addition, the investment market remains robust, with unrelenting demand for prime and A-grade office buildings. This demand and higher–than-expected rental growth is likely to have a positive impact on ANZO and be the catalyst for a solid portfolio revaluation uplift, and consequent increase in the net tangible asset value per unit.” ANZO is managed by AMP Multiplex Management Limited. About ANZO Media enquiries:
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