AMP NZ Office Trust reports rise

Listed commercial property investor AMP NZ Office Trust (Anzo) is reporting a $118.1 million, or 8.1 percent, rise in the valuation of its portfolio.

The rise, which follows a $253m or 22.7 percent increase last year, was driven entirely by rental growth, Anzo said today.

The independent revaluation is expected to result in the value of Anzo's investment portfolio rising to $1.57 billion, as at the end of the trust's financial year on June 30.

Chief executive Robert Lang today said strong rental growth, both in the market and in Anzo's portfolio, had more than offset higher capitalisation rates adopted by valuers in response to a weaker economic climate and global capital market conditions. "Tenant demand has been resilient, vacancy rates have been at historical lows for a number of years, and there is an ongoing shortage of prime and A-grade supply," he said.

Anzo's portfolio was 99 percent occupied, with independent valuers assessing growth in the trust's market rents during the past 12 months at 17.2 percent in Auckland and 8.7 percent in Wellington.

Anzo's net tangible assets (NTA) per unit under new accounting standards were forecast to rise from $1.37 to about $1.46 per unit.

Adjusted NTA, after excluding deferred tax on revaluation gains, which was not applicable to Anzo, was expected to show a 9.4 percent increase, from $1.49 to about $1.63 per unit.

Anzo's gearing -- bank debt to total assets -- was 26.1 percent and expected to reduce further to about 25.5 percent as at the end of June. Both figures were well below Anzo's self-imposed ceiling of 40 percent.

Mr Lang said market fundamentals indicated rental growth would continue.

The 2008 revaluation had confirmed portfolio under-renting at 12.2 percent -- where lease contract rents are below market rents.

Almost 34 percent, or 85,900 square metres, of the Anzo portfolio's net lettable area was subject to reviews during the 2009 financial year.

"The outlook for these reviews is underpinned by low vacancy rates in both Anzo's portfolio and the market, a shortage of high-quality stock and continued tenant demand -- core drivers of rental growth," Mr Lang said.

Among Anzo's 15 New Zealand office buildings, the largest percentage gain was at the HP Tower in Wellington, which was up 16.3 percent, while Auckland's AMP Centre and ANZ Centre added 12 percent and 11.4 percent, respectively.

The value of Anzo's flagship PricewaterhouseCoopers Tower in Auckland rose 10.7 percent, or $29m, to $300m during the year.

The worst performer was the AXA Centre in Wellington, down 3.8 percent to $40.7m, while Mayfair House, also in Wellington, was up just 1.8 percent to $39.8m.

Anzo units were up 1c to $1.21 in late morning trading, having ranged between $1.35 and $1.05 in the past year.