AMP profits tied to tenancy

The country's largest office landlord has pushed up December half-year earnings 9 per cent, winning praise for improving occupancy levels.

AMP Office Trust executive manager Rob Lang, announcing a tax-paid profit of $17.9 million, put the improvement down to a buoyant property market as well as a string of leasing successes.

Of the 42 new leases the trust negotiated in the half-year period, 21 were for new tenants. The portfolio's occupancy stands at 99 per cent, up from 95 per cent.

The trust, managed by AMP Multiplex Management, leased 3.2ha of office space in the half-year, equivalent to about a full year's leasing during the past three years.

Analyst Mark Lister, of ABN Amro Craigs, said the trust's previous occupancy level had been a little lower than most of its peers and it was pleasing to see the figure rise.

The trust's pitch towards accommodating the state sector also helped its fortunes.

"About 18 per cent of income comes from Government tenants, so I would expect this part of the portfolio to have performed well," Lister said. "Aside from Capital Properties, AMP Office Trust has the largest exposure of any listed property vehicle to this sought-after part of the market."

Lang also acknowledged the role of unrealised development margins in the trust's bottom-line result. The margins came from the trust's development work at No 1 and No 3 The Terrace in Wellington.

He said the profit result would have dropped to $17.1 million if the paper gains were removed from the bottom-line result.

The trust's result was also in contrast to National Property Trust's poor November half-year result out last week, showing an after-tax profit of $1.8 million (previously $2.37 million).

Lang predicted the trust would soon be the only NZX-listed investor, exclusively focused on investing in office properties here.

He was referring to the possible delisting of Capital Properties if AMP Property Portfolio's takeover succeeds.