Macquarie Office Trust yesterday announced a massive 242% jump in profit of $456 million for the six months to 31 December 2006.
Macquarie Office chief executive, Adrian Taylor said the results demonstrate the Trust is now delivering on its key objectives.
Distributable earnings per unit increased to 6.33 cents per unit for the six months to 31 December 2006 — up 13% on the same period last year. The distribution per unit is 5.60 cents per unit which excludes gains from asset sales.
Macquarie Office also continued its recycling program selling in excess of $187 million worth of offices.
“We undertook to sell approximately $200 million in assets to capitalise on asset repositioning and take advantage of the strength of investment demand in the current environment.
"We have recycled this capital into higher performing investments including development and have been able to capture opportunities presented via the Macquarie global network,” Taylor added.
During the six month period, Macquarie Office raised $187 million via the sale of Railway Parade, Burwood; Elizabeth Plaza, North Sydney and One Liberty Square, Boston. This capital will be partially reinvested into The Atrium, Charlottenberg Berlin, Germany on settlement – Macquarie Office’s first European purchase.
Taylor said the Berlin market presented significant opportunities for investors.
“German office markets are currently in recovery, with low but growing rents and properties trading at below replacement value,” he said. The Atrium will be acquired on a six per cent initial yield and the average rental for the property is seven per cent under market.
“Purchasing this property off-market clearly demonstrates the value the wider Macquarie network can bring to investors,“ he said.
Taylor said the Australian office market continued to perform well, while offshore investments secured diversification of capital and a larger universe of growth opportunities.
“Our acquisitions and ventures overseas have to date been highly targeted towards growth markets, and we will continue with this approach. We seek to continue to draw on the Macquarie network to pursue acquisitions in the US, Europe and Asia.”
Portfolio occupancy is 96% and the unexpired lease term has been extended to 5.8 years.
“Upward revaluations during the period have been driven by strong leasing results, asset repositioning through redevelopment and improved market conditions increasing net tangible assets by a further 17 cents per share.
"This represents a 12% increase in the six months to 31 December 2006 and a 25% increase for the calendar year.”
Taylor said the gains were also evident in the US market.
“Investors have benefited from our efforts to re-weight the portfolio to Southern California with impressive valuation gains recorded on these assets. The results also reflect increased occupancy at a number of the Trust’s US properties increasing occupancy of the entire US portfolio to 95%,” he said.
Current and future developments are progressing well and are expected to deliver strong returns to investors.
In Australia, the office component of the development at 2 Market Street, Sydney, now 100% leased and is due for completion in June this year with a forecast 27% total return. The proposed development at 171 Collins St, Melbourne is expected to deliver a total return of 15 to 20%.
Meanwhile, the Trust’s development at Riverpoint, Phoenix, Arizona is progressing well and expected to deliver returns of 17%.
Taylor said the Trust was well positioned to continue performing strongly for the remainder of the financial year.
Australian Property Journal
