ING Office Fund has maintained its ranking as the best performing listed office trust after delivering another AIFRS adjusted net profit of $329.8 million for the year ended June 30, 2006.
The fund’s distributable income, which excludes the $209 million impact of AIFRS, was $111.7 million compared with $106.4 million for the previous year. Distributable income per unit of 10.67cents for the year exceeded distributions of 10.35cents, resulting in an increase in the fund’s undistributed income balance to $11.8 million.
According to IOF, the fund has delivered total return of 19% for the year, making it the best performing listed office trust over the three and five year periods to June, 2006 when compared to the UBS Commercial 200 index and S&P/ASX prop 200 accumulation index.
IOF’s chief executive Tino Tanfara said the solid result, reflects IOF’s disciplined repositioning and diversification strategy over the past few years.
He added that the strategy is been complemented by improving office market fundamentals, particularly from the Brisbane portfolio.
During the year, over 117,000 sqm or 23% of the portfolio has been renewed or re-leased. The portfolio’s retention rate has increase to over 90% and occupancy are at 99% with lease expiries for 2007-2009 reduced from 35% to 23%.
Meanwhile, the fund has also further diversified its reach in the global markets with acquisitions in Washington DC – the Homer Building for $US63 million and Boston – the Waltham Woods building for $US65 million in the United States.
In addition, the fund has debut in Europe with a €37 million acquisition in Prague and more recently a €130 million purchase of the NVH Building in Paris, which was made after June 30, 2006.
Tanfara said the diversification has broadened the fund’s earnings base into key global office markets, which will result in future enhanced earnings.
Looking ahead, Tanfara said given the minimal lease expiry risk in the short term, the fund is well positioned to benefit from improving office market fundamentals, which, in a number of the fund’s current investment markets, have already started to produce significant effective rental growth.
“Management’s focus is to continue to improve the fund’s earnings and deliver sustainable distribution growth of 2-3%p/a over the medium to long term,” he added.
By Adam Parsons
