AMP NZ Office to spend $50.4m on capital building buy-up
AMP NZ Office, which sold its Chews Lane building in Wellington last year, plans to spend $50.4 million on two buildings near the Beehive and Parliament.
BUSINESSDESK: AMP NZ Office, which sold its Chews Lane building in Wellington last year, plans to spend $50.4 million on two buildings near the capital city’s Beehive and Parliament.
The commercial property investor has agreed to buy Wellington’s 10-storey Bowen State and 15-storey Charles Fergusson buildings from Capital Properties (Wellington), a member of the AMP Capital Property Portfolio, the company said.
The price reflects an initial yield of 10.7%, with a valuation cap rate of 9.9%, and represents a 10-year internal rate of return on an "as-is" basis of 10.3%.
“We see Bowen Campus as a real opportunity,” chief executive Scott Pritchard said.
“It is in a highly significant part of central Wellington and offers an attractive range of options for meeting continuing demand for quality office space in what is an established location.”
The property is 92% occupied, mainly by the Ministry of Social Development, whose lease expires in 2015.
The acquisition boosts ANZO’s portfolio weighting to Wellington to 52%, as the government clamps down on spending by aggregating administrative and support service functions.
That includes targeted annual savings of some $32m by rationalising its office space.
ANZO will fund the purchase with bank debt, boosting its bank facility to $475m from $400m. The deal will lift the company’s gearing to 25% from 22% as at December 31.
The deal will immediately add to earnings, but will have a minimal impact on the 2012 financial year, with a settlement date in late May.
ANZO said the buildings were structurally sound but will need “substantial reinvestment” to modernise them once the existing leases expire.
The shares rose 0.5% to 93.5 cents, and have gained 13% this year.
Paul McBeth
Wed, 18 Apr 2012
Wed, 18 Apr 2012
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AMP NZ Office to spend $50.4m on capital building buy-up
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