AMP NZ Office Trust downgrades holdings

By ANNE GIBSON property editor

One of the largest corporate landlords, AMP NZ Office Trust, has bumped down the value of its properties by $10.2 million.

Citing rising interest rates and the lack of office block sales, the trust downgraded the value of its holdings from $403.4 million to $393.6 million, even though it said its buildings were 99.1 per cent tenanted.

The revaluation helped turn gross income in the year to June 30 of $67.9 million into a net after-tax profit of only $20.9 million, which was still up from the $7.45 million net profit reported last year.

But in announcing the result yesterday, the trust said this would not change the payout to its unit holders, who will receive 7.1c per unit for the full year. Unit holders got an interim distribution of 3.5c in March and will get a further 3.6c on September 21.

Net office rental increased by a modest 0.9 per cent to $38.3 million. Indirect expenses increased by 6.1 per cent to $9.4 million, largely as a result of a $1.6 million capital expenditure charge on the sale of the Parkroyal.

The operating profit before revaluation and tax was $31.1 million.

The trust, which has almost finished its $170 million PricewaterhouseCoopers centre on Auckland's waterfront, said that tower was 68 per cent leased. It is due to be opened in May next year and projected to increase the trust's property holdings to $567 million.

It said values continued to face testing times, although vacancy rates were falling generally and evidence pointed to encouraging rental growth and an increase in market rents for premium quality office properties.

The annual result included the $55.5 million sale of the Wellington Parkroyal hotel in August last year which the trust said was settled in June 30 this year.

The trust - which said many commentators believed it had the best quality central business district portfolio of buildings in New Zealand - completed 19 rent reviews covering 27 per cent of the net lettable area in its portfolio.

Its properties in Auckland include the ANZ Centre in Albert St (formerly Coopers & Lybrand tower), NZI House (formerly Fay Richwhite building) on Queen St and Quay Tower behind the new PricewaterhouseCoopers Tower on Albert St. In Wellington, it owns 125 The Terrace, the IBM Centre and the Treasury Building

Its units have been steadily falling in price during the past two years. They closed yesterday at 86c. In May 1999 they traded at more than $1.