Anzo posts 4 per cent annual profit rise

AMP New Zealand Office Trust (Anzo) today reported a 4 per cent rise in its June year net profit to $36 million.

The company said it had also revalued its portfolio up significantly for a paper gain of $120m.

Unit holders will receive a total distribution for the year of 7.464 cents per unit against 7.30 cpu last year.

Executive manager Robert Lang said Anzo's total annual return including unit price appreciation was 29.2 per cent, the second consecutive year returns had exceeded 20 per cent.

He said there was an 8.6 per cent increase in rental revenues to a record $95.7m. That reflected improved occupancy across the portfolio, higher rentals following rent reviews, and contributions from the refurbished Wellington buildings, Pastoral House, No 1 The Terrace, as well as Mayfair House, which was acquired during the year.

The increase in rentals and outlook for further growth underpinned a 14.2 per cent portfolio revaluation gain for the year -- the strongest since Anzo was listed in 1997.

Net tangible assets per unit (NTA) rose 20.5 per cent to $1.21 per unit. Anzo units last traded at $1.13.

Anzo's gearing ratio at June 30 was 30 per cent, well below the self-imposed 40 per cent limit and the 50 per cent limit contained in its trust deed.

Anzo's occupancy had been maintained at 99 per cent for the second half of the year, significantly above the 95.1 per cent in 2005.

Six of Anzo's 11 properties are fully occupied.

A total of 28 rent reviews were undertaken in the year delivering an average increase in rents of 15.6 per cent over the two- and three-year periods of the reviews.

Mr Lang said there was good potential for revenue growth with rentals 6.8 per cent below market levels and 56.5 per cent of net lettable area subject to rent review over the next two years.

"In addition, Anzo's portfolio has a low level of lease expiry over the next three years. This, along with historically low market vacancy levels, should ensure continued earnings and distribution growth," Mr Lang said.

He said the company was in a strong position to lift distributions because the distribution reserve, established to maintain stability and growth of future distributions, now contains $5.7m or 1.19 cents per unit.

In addition, Anzo had 87.6 per cent of its bank debt hedged at a fixed rate for an average term of 4.9 years, substantially reducing interest rate volatility and its potential negative impact on earnings.

Anzo's unit-holders will receive a fourth-quarter distribution of 1.884 cents per unit on August 24.

- NZPA