Published 23 December 2009
AMP Capital Property Portfolio has resolved to redeem the $34.2 million of Capital Properties NZ Ltd 8% capital notes with an election date of 15 April 2010.
The company’s 2010 notes remain listed on the NZDX after its equity listing ended in the 2006 takeover by AMP Property Portfolio, which still owns the company. Capital Properties had $9.7 million of capital notes with an election date in April 2009. Those notes were redeemed and replaced by borrowings from an Australian AMP company at a rate of 5.17%.
The 2009 notes will be redeemed for cash, plus any interest due.
Capital Properties’ interim report discloses a 12.5% fall in fall of its property assets in the past year – down $84.8 million to a portfolio of $560 million, also after sales and an $8.1 million increase in liability for interest rate swaps.
Chairman Anthony Beverley said management had focused on maintaining occupancy & cashflow, conserving capital & reducing bank borrowing through the sale of property.
He said in the interim report: “An increase in capitalisation rates is the key driver of the change in value of the company’s property assets, and continued volatility in interest rate markets is the key contributor to the unrealised loss in value of the interest rate swaps. The aggregate effect of these events has resulted in a net loss before tax of $4.3 million ($24.4 million net loss a year earlier).
Mr Beverley said Capital Properties’ total leverage fell from 23.6% to 21.8% in 6 months, primarily due to the reduction in the borrowing from the company’s parent following the sale of property.
NTA/share fell from $1.82 a year ago to $1.63.
Mr Beverley said the outlook for the New Zealand property market “is one of caution & consolidation. As the recession has led investors to reprice risk, capitalisation rates have been the first to move. Rental rates usually follow, and this has been observed in the Auckland office market.
“As economic growth emerges both domestically & globally, a return of confidence should see valuations stabilise and the demand for office & industrial space improve. Over the next 6 months, management will attempt to further reduce balance-sheet leverage through the sale of some of the company’s smaller properties. This is part of a strategy being implemented by the company’s parent, AMP Capital Property Portfolio, to strengthen its balance sheet by reducing leverage to a target 35% in the next 6-month period.”
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Attribution: Company release, story written by Bob Dey for the Bob Dey Property Report.