Unrealised loss for property trust

ANO

0.895

-0.01

-0.56%

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AMP NZ Office Trust has reported an unrealised loss of $72.25 million in the value of its portfolio in the three months to 30 June.

The latest revaluation shows a $239.10 million, or 15.24 percent reduction in the Trust's portfolio of commercial office property for the year to June.

The Trust has a total portfolio valued at $1.329 billion.

Chief executive Robert Lang said that the credit crisis and the recession had a significant impact on most asset classes, including property.

The latest three-month revaluation was attributed to the effects of the deterioration in sentiment held by valuers around market rental levels and rental growth projections, which have a bearing on the increased capitalisation rates.

"This is consistent with our expectations and the views held at the time of ANZO's recent rights issue," Lang said.

"Valuations are under pressure from the dual impact of capital market illiquidity and weakening rental levels, and this environment is likely to prevail."

The Trust completed a $201.3 million rights issue in June.

Lang reiterated that today's revaluation was unrealised and would not affect distributions to ANZO's unit-holders

Gearing for the Trust is at approximately 20.5 percent, well below its 40 percent loan covenant limit.

ANZO's existing banking loan facilities do not expire until late 2011 and mid 2012.

Lang said that the Trust's 21 Queen Street Development would be treated as a completed but fully vacant development.

The project is expected to be valued below cost on completion and as a result, an appropriate impairment will be recognised in the year-end accounts.

As at 30 June 2009 the Queen Street property was valued at $71 million. This compares to $87 million in March 2009.

ANZO's full-year result for the year to 30 June 2009 is scheduled to be announced on August 13.

- © Fairfax NZ News