Daily ShareChat: AMP Office Trust

By Jenny Ruth

Friday 5th November 2010

AMP Office Trust's distributable profit of $15.1 million for the September quarter, although down 5.8% on the same quarter a year earlier, was ahead of her $14.5 million forecast due to slightly higher rental revenue and slightly lower interest and tax, says Buffy Gill at Goldman Sachs.

While rentals were down 2.1% year-on-year, normalised rentals were up about 1.2%, Gill says.

“This is being driven by rent reviews from the fourth quarter on rentals that were set in 2006/07 and are still providing a small amount of underlying growth. This is the first quarter in the last year which has posted a positive quarter-on-quarter number,” she says.

Of the key expiries coming up, she understands Russell McVeagh has recently renewed its lease and the company is still in discussions with Minter Ellison and Marsh/Mercers, the other two key expiries this financial year.

“As long as APT retains these tenancies, it should be able to hold this level of quarterly revenue for the remainder of 2011,” Gill says.

APT's occupancy rate fell to 90.2% at September 30 from 90.4% at June 30 but a couple of new leases have since lifted it to 90.8%, although that is still below Gill's 91% expectation.

Gill values APT units at 96 cents and has a 78 cent 12-month target.

Recommendation: hold.

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