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ING Property sees challenging year ahead

Tuesday 24th August 2010

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Listed property manager ING Property Trust said it sees challenging times ahead for New Zealand's property market, particularly in the commercial office sector.

In an address to shareholders at its annual meeting, the trust said it has been working over the year to raise the value of its portfolio by shedding lower-value and high-risk properties, and maintaining high occupancy levels on its remaining portfolio.

“International and domestic economies continue to face challenges and the speed, strength and nature of recovery is yet to be determined,” said trust chairman, Mike Smith.

“The trust’s portfolio is however well positioned for this environment and the well diversified nature of the portfolio and its income stream provide a relatively sound base to generate positive income returns.”

The trust had a loss of $40.2 million in the year ended March 31, down from loss of $89.4 million in the previous period. Final net rental income for 2010 was $77.9 million, down from $87.8 million in 2009.

The significant concern, according to ING Property, was the commercial property sector, where valuations and rental levels are under pressure as a number of planned buildings come on line.

“The degree to which these changes are already priced into the current asset values will be largely dependent on the speed with which the demand for office space improves and the timing of delivery of new stock to the market,” Smith said.

The trust said it is facing a deferred tax liability of $96.8 million due to changes to New Zealand tax depreciation rules, which it will realise in the 2011 financial year.

The trust noted the write-down is non-cash based, and will not affect operating earnings, and forecast a final dividend of seven cents per unit for the full-year to March 31 2011, down from 7.92 cents in the previous period.

Distribution for the quarter was 1.75 cents per unit plus 0.19 cents per unit of imputation credits.

ING Property, which owns 81 properties, will change its name Argosy Property Trust as of Oct. 1in the wake of ANZ Bank buying fund manager ING New Zealand, which has already announced its name change to OnePath. The management team and board will remain unchanged.

ING Property’s shares are steady at 69 cents, having lost 14.8% of their value so far this year.

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