KEY POINTS:
New Zealand's biggest commercial landlord has suffered a bottom-line profit drop, hit by rapidly changing interest rates.
AMP NZ Office Trust yesterday announced a net after-tax loss
of $4.9 million in the six months to December, a big change on the $22.1 million it made in the same period in 2007.
But Rob Lang, chief executive of the trust's manager, said the business was on track to deliver higher unit-holder distributions for the full year because the loss was unrealised and operating profit was up from $28.4 million to $30 million.
Later this month, the trust will pay its second-quarter distribution of 1.8 cents a unit plus imputation credits.
Lang said International Financial Reporting Standards required ANZO to take non-cash items into account and the bottom-line figure was affected detrimentally by a $39.6 million loss on interest rate swaps.
This amount was not unexpected, he said, attributing it to the fall in the official cash rate and unusual capital market environment.
The loss does not affect the profit available for distribution to investors, Lang said.
The trust, yesterday trading at 92c, has renewed half its total bank debt facility of $485 million. It got favourable interest rates and is now negotiating renewing the remainder of the debt, Lang said.
The current average interest rate on its debts is 7.65 per cent.
Its gearing is 28.7 per cent which, Lang said, was low. Falling interest rates giving low returns to fixed-term investors opened up a new spread of opportunities because ANZO's units were trading at a gross yield of 12.5 per cent.
The trust owns property valued at $1.67 billion and is finishing 21 Queen St.
To keep pace with market changes, the trust had decided to bring forward its annual statutory valuations from June to March and Lang noted the valuation environment was challenging.
The trust's buildings include the PricewaterhouseCoopers Tower on Auckland's waterfront,
ANZ Centre, IAG House on Queen St and big holdings in Wellington where the Government is an anchor tenant.
