AMP NZ Office posts 27% gain

Tuesday 19th August 2008

AMP NZ Office Trust, New Zealand's largest investor in office blocks, said earnings rose 27% as demand helped drive up rents.

Distributable profit rose to NZ$52 million from NZ$41 million, the company said in a statement. Rental income rose 12% to NZ$120 million, reflecting acquisitions and rent reviews.

Demand for prime office space in New Zealand has held up as the economy faltered, with vacancy rates near their historical lows, said Robert Lang, the trust's chief executive. Rent review will be "a key source" of earnings growth in the current year, he said.

Units of APT have declined 10% this year, out-performing the benchmark NZX 50 Index, which fell 18%. Property trusts have benefited from demand for office space in central business districts, which have held up better than residential property.

"New Zealand's prime office sector is showing strong resilience in a number of important ways and in the face of a worldwide economic slowdown," Lang said. "New Zealand is a standout performer among global office markets right now."

APT's fourth quarter net distribution will be 2.045 cents a unit, bringing the full-year payments to 7.613 cents.

APT has a NZ$485 million bank debt facility that expires October 2009 to cover its committed portfolio and capital spending. Some 89% of bank debt was hedged via interest rate swaps for an average duration of more than five years. Its weighted average interest rate was 7.52%.

By Jonathan Underhill

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