Daily ShareChat: AMP NZ Office Trust

By Jenny Ruth

Thursday 29th October 2009

AMP NZ Office Trust (APT)'s $16.1 million in distributable profit for the three months ended September was slightly ahead of his forecast due to higher rental income than expected, says Forsyth Barr analyst Jeremy Simpson.

Rental income rose 7% to $35 million.

"APT benefited from receiving back rent from 2009 that was delayed as a result of rental negotiations and also lower interest costs, given its recent large capital raising," Simpson says.

Distributable profit per unit was down 17% at $1.61 due to dilution from the $201.3 million rights issue completed in June.

Simpson says APT's manager has been under pressure from the investment community to improve the alignment of its interests with those of its investors and the manager is considering moving from a base fee only to a lower base fee plus an incentive component.

"We view this announcement as very positive," he says. Management fees on the largely vacant 21 Queen St, Auckland property will be cut 50% and will increase as the building is leased with the full fee earned once it is 75% leased.

"Although occupancy is only 4.5%, interest from potential tenants continues to build and we would not be surprised to see further leases signed up over the next few months."

Recommendation: accumulate.

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