AMP NZ Office Trust full-year operating profit up 14%

By NZPA

Monday 13th August 2007

AMP NZ Office Trust (ANZO) has reported a 14% increase in full-year operating profit before tax to $41.03 million, in a year during which rentals passed the $100 million mark for the first time.

ANZO refers to the pre-tax operating profit as its distributable profit, as until now deductions and tax losses carried forward from previous years have offset the trust's tax liability.

But those have now come to an end and during the 2008 financial year, ANZO will become a taxpayer for the first time.

Describing itself as this country's largest listed investor in prime commercial property, ANZO said rentals had risen 11.9% or $11.41 million to $107.12 million in the year to the end of June.

Net profit after tax was up 132.4% from the previous year to $225.7 million, with a large impact from unrealised profits resulting from a $257.3 million portfolio revaluation gain.

The revaluation gain was double that of the previous year, which had itself been a record.

Along with acquisitions, the revaluations lifted ANZO's total assets by 38.3% to $1.43 billion.

Chief executive Robert Lang said portfolio occupancy remained above 98% for most of the year, while the year's 34 rent reviews delivered an average increase in contract net rents of 25%.

ANZO's total return -- income yield plus unit price appreciation -- for the year was 23.2%, the third consecutive year in which it had exceeded 20%.

Earnings per unit for the year were up 5.4% to 7.96 cents per unit, while the total distribution for the year was 4.02% higher than last year at 7.76 cents per unit.

ANZO unit-holders, excluding APTNB holders, would receive a fourth-quarter distribution of 1.99 cents per unit.

The trust's bank gearing -- total debt-to-total assets -- ratio at balance date was 22.2%.

That was well below the self-imposed 40% maximum, Lang said.

The conservative gearing level, along with a well-hedged interest rate profile, had insulated ANZO from recent movements in market interest rates and substantially reduced future earnings risks and volatility.

Eight of ANZO's 13 investment properties were 100% occupied, and only two properties had a full floor available for lease.

Market vacancy rates were at historic lows.

The portfolio was more than 12.5% under-rented, with more than half of the portfolio area subject to rent reviews over the next two financial years.

During the year ANZO bought three new properties with a total value of almost $130m. The were Wellington's AXA Centre and Deloitte House, and Auckland's 21 Queen St.

ANZO shares were unchanged at $1.26 in mid-afternoon, having ranged between $1.42 and $1.10 in the past year.

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