AMP property trust delighted with Wellington office project

AMP NZ Office Trust (ANZO) says its redevelopment of No 1 The Terrace in Wellington, an office block housing Treasury, the Ministry of Health and some parliamentary offices, is delivering returns above original expectations.

ANZO executive manager Robert Lang said the yield on cost was 9.0 per cent, while the development margin was a minimum of 22 per cent and could improve further when project costs were finalised.

The $33 million project included the full interior refurbishment and the construction of an adjoining low-rise annex at No 3 The Terrace.

The property was now valued at $76.1 million, benefiting from an improved valuation environment while the project took place, and was a contributor to ANZO's recently-announced $126m revaluation.

The property is 96 per cent occupied after Treasury cut its space requirements by 31 per cent. Its move to open plan offices meant it needed only half of the building's 14 floors.

Mr Lang said 41 per cent of ANZO's Wellington office portfolio was now occupied by Government tenants.

It said the Wellington portfolio was 9 per cent under-rented (below market rentals) and this augured well for the company's future earnings.

ANZO shares were down 1c on $1.14 in morning trading. They have traded between 94c and $1.15 in the last year.

- NZPA