Anzo result is predictable but also solid

Friday 31st August 2001

By Campbell McIlroy

AMP NZ Office Trust's annual result offered very little in the way of surprises to the market this week. One analyst even went so far as to describe the result as pretty boring.

About the most interesting thing to come out of it was discussion by executive manager Rob Lang on the possibility of a new tower in Wellington.

For its part Anzo turned in a solid, if unspectacular, performance recording a 1.7% increase in total gross operating income to $67.9 million.

Net office rental income increased marginally (0.9%) to $38.3 million largely due to the completion of 19 rent reviews during the year. But the benefit of rent review and lease negotiations came at a cost of $10.7 million for the year, an increase of 8.6%.

The trust has also seen its 100% occupancy rate drop marginally to 99.1% due to one vacant floor in Auckland's Quay Tower.

Like many other listed trusts Anzo is also having to face up to over-renting in its portfolio. Over-renting is the amount of rent being paid above the market rate. In Anzo's case this amounts to about 19.1%, down from 25% last year, and was the fundamental reason for the $10.2 million or 2.5% drop in the value of its portfolio.

Mr Lang said the market had started to experience some positive rental growth, particularly in Wellington, which was helping to reduce the level of over-renting in the portfolio.

But he said the challenge was to deal with lease expiries well in advance to reduce the risk of terminating cashflows.

The Treasury's lease for all of No 1 The Terrace expires in 2005 but given its location and desirability for the public sector should not pose too much of problem.

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