Steady result for office trust

By Phil Boeyen, ShareChat Business News Editor

Tuesday 28th August 2001

AMP NZ Office Trust has reported a modest rise in net office rental income for the year ended June.

The trust says net rentals increased by 0.9% or $360,000 for the period to $38.3 million, reflecting an improvement in premium quality office market rents.

The trust undertook 19 rent reviews during the year and also completed several new leasings and lease restructures, resulting in a portfolio occupancy rate of 99.1%. The current vacancy in the portfolio is limited to one office floor in Quay Tower, Auckland.

Direct office building and other expenses increased by 8.6% or $0.85 million to $10.7 million, mainly from increased professional fees paid as a result of a higher number of leasing and rent review transactions.

Indirect expenses rose6.1% or $9.4 million, largely as a result of a $1.6 million capital expenditure charge on the sale of the Wellington Parkroyal Hotel which was sold last August for $55.5 million.

"This amount reflects the capital expenditure undertaken to maintain hotel standards and services to a level that ensured its market position and operational performance remained strong," says manager Robert Lang.

Total gross income for the year rose 1.7% to $67.8 million, giving an operating surplus before revaluations and tax of $31.1 million. However this figure was offset by a 2.5% or $10.2 million revaluation write-down to generate a net surplus of $20.9 million compared with $7.45 million previously.

The unrealised revaluation write-down does not have an impact on the amount of cash available for distribution and unit holders will receive a final un-imputed distribution of 7.1 cents per unit, the same as last year.

Mr Lang says the driver for the revaluation write-down is over-renting, which continues to suppress property values and remains an industry wide issue.

"The pleasing aspect is that over-renting is becoming less of an issue for the trust. In light of improving market vacancy rates and encouraging evidence pointing to rental growth and an increase in market rents in the premium office property sector the trust is poised to capture the benefits of these positive trends."

Mr Lang says the new $170 million PricewaterhouseCoopers Tower in Auckland is on schedule to be fully leased and ready for occupation by May next year, with tenants already signed up for 68% of the building.

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