AMP NZ Office Trust, ANZO, said the value of its property portfolio declined by 7.6% in the year to June 30, 2010 and it was unclear if tax changes announced in the government budget last week would have a flow-on effect on commercial property values.The
AMP NZ Office Trust, ANZO, said the value of its property portfolio declined by 7.6% in the year to June 30, 2010 and it was unclear if tax changes announced in the government budget last week would have a flow-on effect on commercial property values.
The portfolio of New Zealand's largest listed investor in prime commercial office property is now valued at $1.27 billion. It fell in value by 3.43% in the six months to June 30.
Chief executive Robert Lang said the main drivers of the valuation decline were lower effective market rents, extended periods for re-leasing vacant space, and weaker rental growth expectations.
The weighted average market capitalisation rate adopted by the valuers across the portfolio was 8.14%, up only slightly from 8.08% six months previously.
The revaluation will be reflected in ANZO's full-year result to June 30, 2010, due to be announced in August. The unrealised valuation decline does not affect distributions to unitholders.
ANZO is 20% owned by Abu Dhabi Investment Authority (ADIA).
Mr Lang said that while he expected the worst of the valuation declines were now behind ANZO, the road to a full market recovery was likely to be slow and contingent on improving investor confidence, property market and macro economic conditions.
The property tax changes announced in last week's budget were not expected to impact ANZO's after-tax distributable profit until the 2012 financial year commencing July 1, 2011. Distributable profit was expected to reduce by approximately 7 percent to 9 percent in that year.
On a positive note, the decline in the corporate tax rate was beneficial to ANZO tenants, and the reduction in PIE tax rates was expected to encourage further savings and investments.
