The value of listed office property investor AMP NZ Office Trust's portfolio fell 4.3 per cent or $60.2 million to $1.33 billion in the past six months.
The revaluation, for December 31 compared with June 30, will be reflected in the trust's interim financial result to the end of December.
Chief executive Robert Lang said the decline in portfolio was unrealised and did not affect distributions to unit-holders, which were on track to increase by 2 per cent on a gross basis for the full financial year.
The revaluation was in line with expectations and the trust's balance sheet remained in strong shape to withstand valuation headwinds lingering after the global financial crisis, Lang said.
The trust's gearing ratio would still be one of the lowest in the Australian and New Zealand listed property sectors. It was forecast to be about 21.8 per cent as at the end of December, compared with the loan covenant ratio of 40 per cent.
The prospective interest cover ratio for the 2010 financial year was a healthy 3.7 times, compared with a covenant of 2 times.
The trust's net tangible assets (NTA) per unit as at December 31 was forecast to decrease to about 92c per unit, down from 97cpu at June 30. Adjusted NTA, after reversing deferred tax on revaluation gains, was expected to be about 96cpu, down from $1.02.
The main drivers of the valuation decline were lower effective market rents, extended periods for re-leasing vacant space, and weaker rental growth expectations, Lang said. He cautioned about a continued shortage of evidence, in terms of new leases and sales, to support valuations.
In the financial year so far 48 rent reviews, covering 57,360sq m, had been settled, reflecting an average increase of 24.6 per cent over previous contract rentals.
Portfolio occupancy remained consistent with the 90 per cent reported in the trust's first-quarter financial result.
Excluding the recently-completed 21 Queen St (where the first tenant has been confirmed), portfolio occupancy was 94.9 per cent.
