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AMP NZ Office annual earnings rise

Tuesday 3rd August 2010

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AMP New Zealand Office Trust (ANZO), the property investor looking to transform itself from a listed trust to a listed company, lifted distributable earnings last year, and is still working through its corporatisation process.

The Wellington-based trust reported distributable profit of $60.7 million, or 6.08 cents per unit, in the 12 months ended June 30, compared to $59.2 million a year ago. That fell just short of Forsyth Barr analysts’ forecast $62.3 million.

Distributable profit strips out unrealised movements in the fair value of companies’ assets, and is considered an accurate view of earnings by property entities.  

ANZO cut its net loss to $152.1 million, or 15 cents per unit, from $192.8 million, or 27 cents, a year ago, reflecting a bigger drop in property values in the previous period. Revenue rose 3.3% to $138.1 million.

The trust said it was still working to overhaul its structure by separating the interests of ANZO and its manager and amending its fee structure to align the manager’s incentives with those of unit holders. The unit holders will vote on the changes as soon as ANZO has received approvals from regulators.

“Property market conditions continue to be challenging, with the Auckland office market, in particular, remaining difficult,” said chairman of the manager Craig Stobo in a statement.

“While we have started to see the New Zealand economy return to positive GDP growth, volatility remains within the global economy and this will continue to have an impact on the road to a full market recovery in the property sector.”

The shares were unchanged at 71 cents in trading today, and have declined 6.7% over the past year. Unit holders will receive a net fourth-quarter distribution of 7.058 cents per unit, compared to 6.92 cents a year ago, taking the annual net distribution to 6.113 cents, from 6.337 cents in 2009.

Commercial property landlords were dealt a blow by the government this year when it rebalanced the tax system, cutting corporate and personal income tax, but lifting GST and removing companies’ ability to claim deductions on the depreciation of buildings.

ANZO expects the tax changes will reduce its net cash distributions by between 7% and 9%, and face further downside if claims on building fit-outs are removed.

The trust wrote down the value of its investment property by $114.6 million to $1.277 billion, as at June 30. Its average occupancy rate fell to 90.4% from 97.2% a year ago, with the weighted average lease down to 4.5 years from 4.8 years in 2009. 

ANZO is currently seeking a new chief executive, after Robert Lang left the company. It expects to make an announcement by the end of the September quarter.

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