AMP NZ Office Trust's earnings per unit continue to climb

Media release

Tuesday 1st February 2005

AMP NZ Office Trust's (ANZO's) earnings per unit continue to grow as a result of strong portfolio performance and favourable market conditions.

ANZO's executive manager Robert Lang said earnings per unit for the six months to December 31, 2004 were 3.82 cents, a 10.4% gain on the previous year.

Lang said unit-holders would receive a distribution of 1.80 cents per unit for the second quarter. This takes the total distributions paid to investors for the six months to 3.6 cents per unit, up 2.85% in comparison to the same period last financial year. The record date is February 15 and payment will be made on February 22.

He confirmed the upward revised distribution target for the full year ending June 2005 of 7.3 cents per unit, representing a 4.3% increase on the previous year.

Commenting on ANZO's interim result, Lang said year-on-year comparisons reflected the series of positive initiatives announced during the past 12 months, including acquisitions and changes to ANZO's capital structure. The net surplus for the six months was $16.46 million, a decrease of 4.8%, largely due to additional interest and one-off capital raising costs. Unit holders have benefited by an increase in earnings per unit of 10.4%.

Rental revenue for the six months was $43.19 million, a 34.2% increase. Excluding the effect of the three acquisitions, rental revenue showed a like-for-like increase of 4.8%, flowing from increased occupancy and growth in market rentals.

ANZO's surplus after direct expenses was also up, by 35% to $31.20 million. On a like-for-like basis, the increase was 5.4%.

Lang said a record period of portfolio activity underpinned ANZO's performance. ANZO's management team settled the acquisition of two landmark Wellington properties, State Insurance Tower and Mobil on the Park, and completed 22 new leases on more than 25,500 sqm of office space, which helped to maintain a high occupancy level of 95.5%.

Seven rent reviews were completed in the period, with the average increase being a healthy 14.8%. In addition, construction commenced on the $23 million redevelopment of the No.3 The Terrace site. The $7.5 million refurbishment of No.1 The Terrace was completed in November on time and within budget.

Leasing successes included securing the Ministry of Agriculture and Forestry (MAF) for a 12-year term as the major tenant for Wellington's Pastoral House, which ANZO is refurbishing to A-grade standard. ANZO's weighted average lease term is a market-leading 6.5 years.

Lang said that the second half of the 2005 financial year will reflect increased occupancy across ANZO's portfolio and the rental income flowing from the newly-refurbished Pastoral House.

ANZO is well insulated from potential interest rate increases, with 95% of its bank debt hedged at a fixed rate for an average term of 4.9 years.

"The portfolio continues to attract strong levels of tenant demand and the market's response to ANZO's recent investments has been very encouraging."

Following the successful placement of 34.5 million ANZO units in December last year, Lang said unit-holders will soon be receiving information on the unit purchase plan. This will allow all unit-holders to invest up to $5,000 at a price that is the lower of the placement price or the prevailing market value as determined by the manager at the time of the plan.
ANZO is New Zealand's largest listed investor in commercial office property. A unit trust listed on the New Zealand Exchange, ANZO invests predominantly in prime and A-Grade CBD office properties in major New Zealand cities. ANZO currently owns 10 New Zealand office buildings with a total value of more than $760 million - Auckland's PricewaterhouseCoopers Tower, ANZ Centre, IAG House and Quay Tower; and Wellington's State Insurance Tower, Mobil on the Park, HP Tower, 125 The Terrace, No. 1 and 3 The Terrace and Pastoral House.

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