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AMP Office Trust faces big changes

Thursday 18th December 2003

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AMP Capital Investors has done a major review of the listed AMP Office Trust (ANZO) and is intending to do make a number of significant changes, including changing the manager in the fund.

It is planning to move the management to a wholly owned subsidiary, then transfer 50% of the management company to specialist Australian based manager Ronin Property Group.

Ronin runs an ASX listed, specialist office trust which has a market capitalisation of around A$1 billion.

Besides taking up the management of the fund Ronin also plans to become a cornerstone shareholder, initially acquiring 30% of the fund from the National Provident Fund (NPF).

"Under the proposed arrangements, Ronin will commit to maintain a minimum holding of 19.9% of the units of ANZO for two years following the acquisition of units from NPF and 15% thereafter. It is also proposed that AMP Capital will have rights to acquire ANZO units from Ronin in the event Ronin wishes to sell more than 3% of ANZO’s units at any one time, in that initial two year period or wishes to sell its shares in the management company."

As part of the changes the fund will shift its focus from solely being on high quality commercial buildings (such as the new PricewaterhouseCoopers building in Auckland) to office properties.

"On a selective basis, we will take advantage of other office market investment opportunities in addition to continuing to pursue growth in the premium sector of the office property market,” executive manager Rob Lang says.

AMP Capital managing director Catherine Savage says the fund is also planning to return $62 million of capital to shareholders with a one-in-seven buyback, plus it will change its distribution policy so more money is paid out to shareholders more often.

The intended buy-back price is $0.87 cents, although this will be finally determined closer to the time.

Other initiatives to be introduced as a result of the review, which as a package are intended to improve the overall of performance of ANZO include:

  • Changing the distribution payment frequency from six-monthly to quarterly;
  • the establishment of a distribution reserve account, to provide greater consistency of distributions to investors
  • the payment of management fees quarterly, subject to Trustee approval; and
  • to align the Trust with standard market practice and subject to Trustee approval, property management fees will in future be paid directly by ANZO, rather than by the manager, and the trust management fee will be reduced 10 basis points to 65 basis points, to reflect this change.
"We are confident the initiatives will enhance unitholder value while maintaining ANZO’s quality earnings and low risk profile," AMP Capital managing director Catherine Savage says.

Lang will continue on as the executive director of the fund.

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