By ANNE GIBSON
The sorry state of the property market was reflected in yesterday's result from one of New Zealand's largest real estate conglomerates, AMP NZ Office Trust, which cut $24.4 million off the value of its buildings.
Despite returning more than last year, having full occupancy and owning arguably New Zealand's finest clutch of skyscrapers and office towers, the Wellington-based company still took a big hit.
AMP declared an after-tax profit of $7.45 million for the year to June, a big drop from last year's $18.9 million.
Before revaluations, the operating profit was $31.9 million, marginally up on the year before.
The declining fortunes of the property sector led AMP to slice the value of its prime portfolio by 5 per cent.
The devaluation had no impact on cashflow so trust holders will get 7.15c per unit, down more than 20 per cent on last year's 8.88c payout.
AMP's buildings are 100 per cent let, setting a benchmark for the industry. They include properties such as the 41-level ANZ Centre (formerly Coopers & Lybrand Tower) in Auckland's Albert St.
"We believe the weakness experienced in the CBD property market over the past two years has levelled out," said trust executive manager Rob Lang.
"However, the fall in market rentals and its effects are still being reflected in valuations which, in line with rising interest rates, resulted in a devaluation of the trust's portfolio to $457.6 million.
"While the writedown is disappointing, the trust's portfolio held its value more effectively than other commercial property portfolios, which anecdotally declined by about 5 to 10 per cent during the same period," Mr Lang said.
"The diversity and quality of the trust's properties and tenants, rent review performance, 100 per cent occupancy and management initiatives helped to minimise the impact of the writedown."
The trust has yet to sell the Wellington Parkroyal Hotel, revenue from which fell $700,000 in the past year, equating to a 3.2 per cent drop in income. AMP put this down to "a challenging commercial business market."
AMP revealed it had a $10 million fighting fund set aside for attacks on its Auckland waterfront tower, and that it would borrow $140 million from the Bank of New Zealand to cover the $147.4 million construction.
The trust owns six buildings, with 74 tenants.
It listed highlights for the past year as:
Starting construction of the PricewaterhouseCoopers Tower in Auckland.
Putting the Parkroyal up for sale.
Increasing the number of investors 5 per cent to 3486.
Mr Lang said the past year had been the most significant since the trust listed in 1997.
AMP trust forced to revalue
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