FORECAST: APT: ANZO announces outcome of full-year portfolio revaluation

25 May 2010 3:02 pm

APT 25/05/2010 FORECAST

REL: 1502 HRS AMP NZ Office Trust

FORECAST: APT: ANZO announces outcome of full-year portfolio revaluation

AMP NZ Office Trust announces outcome of full-year portfolio revaluation

AMP NZ Office Trust (ANZO), New Zealand's largest listed investor in prime commercial office property, has announced the unaudited outcome of its full-year portfolio revaluation.

Chief executive Robert Lang said the unaudited valuation as at ANZO's financial year-end on 30 June 2010 showed a decrease of $45.73 million , or 3.43 percent over the six months since the interim revaluation as at 31 December 2009. Over the full year, the valuation decline has been 7.60 percent. ANZO's total portfolio value is now $1.27 billion.

Mr Lang said ANZO's revaluation performance was in line with expectations, and what has been experienced by other New Zealand listed property entities. "This revaluation appears to confirm that capitalisation rates are stabilising. The weighted average market capitalisation rate adopted by the valuers across ANZO's portfolio for this revaluation was 8.14 percent, up only slightly from 8.08 percent six months previously. He added that capitalisation rates have now eased to levels similar to those recorded in 2002, which - according to CB Richard Ellis research - was the year that they began to firm in the current property cycle.

"The main drivers for the valuation decline have been lower effective market rents, extended periods for re-leasing vacant space, and weaker rental growth expectations reflecting increased supply and subdued business confidence."

The revaluation will be reflected in ANZO's full-year financial result to 30 June 2010, due to be announced in August 2010. Mr Lang reiterated that the unrealised valuation decline does not affect distributions to unit-holders, which ANZO has confirmed are on track to increase by 2 percent on a gross basis for the full financial year.

ANZO retains a strong balance sheet with a gearing ratio, following the revaluation, that continues to be one of the lowest in the Australian and New Zealand listed property sectors. This is forecast to be approximately 23.0 percent as at 30 June 2010, compared with the loan covenant ratio of 40 percent. The prospective interest cover ratio for the 2010 financial year is a healthy 3.7 times, compared with a covenant of 2 times.

ANZO's revised net tangible assets (NTA) per unit as at 30 June 2010 under NZ IFRS will be approximately $0.86 per unit. The adjusted NZ IFRS NTA (after reversing deferred tax on revaluation gains, which ANZO is not required to pay under current New Zealand tax law) is expected to be approximately $0.91 per unit.

Mr Lang said that while he expected that the worst of the valuation declines were now behind ANZO, the road to a full market recovery is likely to be slow and contingent on improving investor confidence, property market and macro economic conditions. He added that the accelerating return of leasing activity and investors to the market was an encouraging sign. However, this must be tempered against the risk of market rents continuing to soften, particularly in the Auckland market.

The property tax changes announced in last week's Budget are not expected to impact ANZO's after tax distributable profit until the 2012 financial year commencing 1 July 2011. The impact is expected to reduce the distributable profit in that year by approximately 7-9% and has been widely anticipated by the investment community. In addition, it is unclear if the tax changes announced will have a flow-on effect on commercial property values. On a positive note, the decline in the corporate tax rate is beneficial to ANZO tenants, while the reduction in PIE tax rates is expected to encourage further savings and investments - again, likely to be advantageous for property and ANZO.

ANZO is managed by AMP Haumi Management Limited.

About ANZO

ANZO is New Zealand's largest listed investor in prime and A-grade commercial office property. A unit trust listed on the New Zealand Exchange, ANZO currently owns 15 New Zealand office buildings with a total gross value of more than $1.27 billion - Auckland's PricewaterhouseCoopers Tower, ANZ Centre, 151 Queen Street, AMP Centre and 21 Queen Street; and Wellington's State Insurance Tower, Vodafone on the Quay, HP Tower, 125 The Terrace, No. 1 and 3 The Terrace, Pastoral House, Mayfair House, AXA Centre, Deloitte House and 29 Willis Street (Chews Lane). -ends-

Media enquiries: Robert Lang Sue Ryan Chief Executive Officer Communications Manager AMP NZ Office Trust AMP NZ Office Trust Office: +64 4 494 2268 Office: +64 4 494 2260 Mobile: +64 29 494 2268 Mobile: +64 29 494 2260 Email: robert.lang@anzo.co.nz

See valuation summary table on next page.

Property Dec 2009 Market value $ Dec 2009 Market yield / Cap rate June 2010 Market value $ June 2010 Market yield / Cap rate Value Change Dec 2009-June 2010 Wellington portfolio HP Tower 69,800,000 7.75% 68,600,000 8.00% -1.72% No.1 The Terrace 88,000,000 7.63% 85,500,000 7.75% -2.84% 125 The Terrace 63,600,000 8.25% 62,000,000 8.25% -2.52% Pastoral House 62,500,000 8.20% 60,500,000 8.25% -3.20% Vodafone on the Quay 99,900,000 7.70% 97,400,000 7.75% -2.50% State Insurance Tower 121,900,000 8.00% 120,600,000 8.00% -1.07% Mayfair House 34,000,000 9.25% 34,500,000 8.75% 1.47% No.3 The Terrace* 10,300,000 N/A 10,275,000 N/A -0.24% AXA Centre 36,000,000 9.00% 33,500,000 9.25% -6.94% Deloitte House 52,100,000 8.20% 50,500,000 8.25% -3.07% 29 Willis Street (Chews Lane)** 60,300,000 7.90% 48,400,000 7.90% -19.73% Auckland portfolio 151 Queen Street 73,400,000 8.50% 66,800,000 8.88% -8.99% AMP Centre 93,600,000 8.50% 91,100,000 8.50% -2.67% ANZ Centre 177,500,000 8.25% 170,000,000 8.25% -4.23% PwC Tower 225,000,000 7.75% 212,000,000 7.80% -5.78% 21 Queen Street 66,250,000 8.13% 65,100,000 8.13% -1.74% TOTAL/WEIGHTED AVG*** 1,334,150,000 8.08% 1,276,775,000 8.14% -4.30%

Valuations carried out by Colliers International and CB Richard Ellis.

* Ground lessors' interest. Valued on DCF basis to reflect 48 year remaining fixed (highly over-rented) cash flow ** 30 June 2010 valuation reflects the recent sale of five Chews Lane retail units (sale proceeds of $11.65m, before deducting sale costs). Excluding these units from both the 31 Dec 09 and 30 June 2010 valuations indicates an asset valuation decrease of -0.4% over the six month period. ***The portfolio value change of -4.30% ($57.34m) is post the sale of Chews Lane units. Pre the sale of these units indicates a valuation decline of 3.43% ($45.73m). End CA:00195314 For:APT Type:FORECAST Time:2010-05-25:15:02:42

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