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AMP NZ Office 1H profit falls 28.2%

Wednesday 15th February 2012

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AMP NZ Office said first-half net profit fell 28 percent to $20.4 million as rental income fell due to the sale of a building and the departure of major tenants.

The property company said excluding non-cash adjustments, net operating profit fell to $26.6 million for the six months ended Dec. 31, from $31 million a year earlier.

Rental income fell 5.8 percent to $64.5 million. The building sold was in Chews Lane, Wellington while one tenant, Westpac, vacated the PwC Tower in Auckland. The company also lost Bank of New Zealand as a tenant in its State Insurance Tower in Wellington.

Chief executive Scott Pritchard said the company's 92 percent occupancy rate was ahead of forecast because of sustained leasing momentum. During the six months 32 leasing transactions were completed representing about 11 percent of the portfolio.

Its weighted average lease term increased to 6.2 years from 5.8 in June last year.

“This has been a good six months,” Pritchard said. “For the past 12 months we have focused on reducing risk and improving long-term earnings security. We are pleased that both these goals have been largely achieved.”

Market indications for the prime CBD office space the company specialises in continue to improve and most research houses are forecasting rental growth in Auckland and Wellington, he said.

An internal review of June 30 valuations indicated no material value movement during the six months.

The company reiterated its distributable earnings guidance for the full year of between 5.1 cents and 5.4 cents per share but said the actual result is likely to be at the lower end.

It will pay a second quarter dividend of 1.26 cents per share with 0.1668 cents of imputation credits.

AMP NZ Office shares are unchanged at 87.5 cents, near the top of its 78 cents-to-88 cents trading range over the past 12 months.


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