ING Office Fund has credited its traditional A-REIT model which has withstood volatility in the global financial markets and at the same time delivered a 9% distribution growth.
For the 12 months to June 30, IOF’s distributable income increased by 9.0% to $135.5 million from $124.3 million for the 2007 financial year. Distributable income per unit increased from 10.8 cents to 10.9 cents per unit.
IOF’s chief executive Tino Tanfara said the result is due to the increase in net property income from the stabilised property portfolio, as well as the continued geographic diversification of the fund through its further investment in Europe and the
“In a year of significant volatility in global financial markets, IOF‘s portfolio, through its traditional A-REIT model, has continued to outperform, delivering improved operating earnings, increased underlying distributions and solid operational results from its global office portfolio,” he added.
IOF’s AIFRS adjusted net profit after was $246.6 million – down from $572.7 in the previous year as result of the difference in revaluation gains which were higher last year ($298.8 million) compared to this year ($130.7 million).
During the year, leasing deals totaled over 41,000sqm across the portfolio, securing future annual rental income for the fund of $24.3 million. The fund achieved a tenant retention rate of 67%, an increased occupancy rate of 97% and an average lease term to expiry of 5.3 years
Independent valuations were completed over 55% of the fund’s portfolio during the six month period to June 30 with the remainder of the portfolio undergoing internal valuations.
The independent and internal valuations resulted in an increase in net asset value from $1.73 to $1.81 per unit, while its weighted average portfolio capitalization rate increased from 6.2% to 6.3% comprising the following:
• 6.8% for the Australian portfolio
• 5.7% for the European Portfolio
• 5.9% for the
Tanfara said IOF has no debt facilities maturing until June 2010 and has an average facility term of 3.9 years. With total look through assets of $3.9 billion, the fund’s look through gearing was 34.7%, a 290 basis point reduction from the June 2007 figure of 37.6%.
In addition, IOF has approximately $540 million of undrawn debt capacity available within its unsecured, multi currency, syndicated debt facility.
Looking ahead, Tanfara forecasts distribution will stable at 10.8 cents for FY09 as the payout in the year ahead will be based on effective rents generated by the fund’s property portfolio.
“Management expect further upward pressure on capitalization rates in the year ahead as transactional evidence occurs, although this is likely to be more prevalent in non core and secondary office markets compared with core markets where the underlying office fundamentals and capital sources are generally stronger. The majority of IOF’s assets are located in the core office markets of
“IOF’s underlying fundamentals remain sound– high quality portfolio across core global office markets, long average lease term, high occupancy, low gearing, secure hedging and strong balance sheet. All these place IOF in a strong position to be able to safely navigate through the ongoing effects of the global credit crisis during 2009,” he concluded.
Australian Property Journal
