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ANZO operating profit slightly higher


Thursday 11th August 2011

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Property investor AMP NZ Office (ANZO) reported slightly higher full year operating profit and slightly lower revenue, as occupancy growth offset moderately lower rental levels.

Operating profit for the year to June was ahead of forecast at $61.1 million, from $60.7 million the year earlier, while revenue slipped to $137 million from $137.9 million. Net profit was $10.4m, after a loss of $43m the year before.

Last October ANZO shareholders approved the corporatisation of the company from a unit trust, with the fee structure also changing as the manager reduced its base fee and put a performance fee in place.

ANZO said the lower revenue in the latest year reflected the sale of some retail units in Chews Lane, Wellington.

"Like for like rental income was constant compared with the previous year demonstrating growth in occupancy through the portfolio offsetting moderately lower rental levels," the company said today.

Property expenses were down from the previous year due to a lower level of non-recoverable expenses, but that was offset by increased interest costs due to the completion of the Zurich House, Auckland, redevelopment.

Interest costs associated with Zurich House now had to be expensed rather than capitalised.

Fees paid to the manager were $700,000 lower than a year earlier, taking into account a $741,756 fee rebate that was a result of the corporatisation, ANZO said.

Two performance fees of around $1m each were paid in the third and fourth quarters as ANZO's total return of 28.9 percent outperformed the 21.3 percent return of the listed property sector excluding ANZO.

During the year occupancy of the $1.25 billion portfolio rose to 94 percent from 90 percent, with the key success being a new 15-year lease with ANZ, which would become ANZO's largest customers by leasing an additional 10 floors, taking its total occupancy within the ANZ Centre, in Auckland, to 17,700sq m.

ANZO chief executive Scott Pritchard said the Auckland and Wellington office markets had stabilised, with potential for growth from 2012-13 onwards.

Inquiry levels remained strong, particularly for high quality space, he said.

A fourth quarter dividend of 1.26c per share is to be paid, with dividends for the 2011 financial year totalling 5.47cps.

The expected dividend total for the year to June 2012 of between 5.1cps and 5.4cps was lower than the dividend for the 2011 financial year.

That was mainly due to lower occupancy, arising from the departure of Westpac from the PricewaterhouseCoopers Tower in Auckland, and the BNZ from the State Insurance Tower in Wellington.

ANZO's portfolio had an unrealised decline in value of $36.3m or 2.8 percent as at June 30. Excluding the ANZ Centre, which is to be redeveloped, the decrease in value was $19.6m or 1.8 percent.

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