MACQUARIE OFFICE TRUST
MOF - 2008 Full Year Results Overview - Mr Adrian Taylor, CEO
Thu, 21 Aug 2008 03:30PM
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Adrian Taylor
Thu, 21 Aug 2008
03:30PM Australia/NSW
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MACQUARIE OFFICE TRUST (MOF)
ASX code: MOF
Website: http://www.macquarie.com.au/mof
Industry: Real Estate
Principal Activities:
Property Trust
Address:
Martin Place, No. 1, Level 7, c/o Macquarie Office Management Limited
SYDNEY
NSW
Phone: (02) 8232 6635
Fax: (02) 8232 6510
Executives & Directors
Mr Simon Jones , Chairman, Director
Mr Adrian Taylor , Alternate Director, CEO
Mr Mark Baillie , Director
Mr George Bennett , Independent Director
Mr James Broadbent , Independent Director
Mr Roger Davis , Independent Director
Ms Kylie Rampa , Alternate Director
Mrs Kara Nicholls , Company Secretary
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Company ASX Announcements
Company ASX announcements can be viewed on the ASX website.
Announcements from the preceding six months are shown below.
Please refer to the relevant stock exchange if any of the above information is incorrect
MACQUARIE OFFICE TRUST (MOF) Events
Australia/NSW
MACQUARIE OFFICE TRUST (MOF)
| Notice of Annual Meeting | Wed, 19 Nov 2008 |
| Quarterly Market Update | Tue, 4 Nov 2008 |
| Distribution and Estimated Tax Components | Thu, 30 Oct 2008 |
| Response to ASX Price Query | Fri, 24 Oct 2008 |
| Change in substantial holding from MQG | Tue, 21 Oct 2008 |
| Annual Report - 2008 | Mon, 29 Sep 2008 |
| Estimated Distribution - 30 September 2008 | Thu, 18 Sep 2008 |
| Unitholder Update | Wed, 10 Sep 2008 |
| Form 604 - Change in substantial holding | Fri, 22 Aug 2008 |
| Full Year Results - Presentation | Thu, 21 Aug 2008 |
Please note: This company appears on this website as a result of its listing on the Australian Securities Exchange. Boardroom Radio does not claim any association with any company listed on this site.
INTERVIEW WITH ADRIAN TAYLOR, CHIEF EXECUTIVE OFFICER OF MACQUARIE OFFICE TRUST
“MOF - 2008 Full Year Results Overview - Mr Adrian Taylor, CEO”
http://www.brr.com.au/event/49754
THURSDAY, AUGUST 21 2008, 3:30 PM.
BRR Macquarie Office Trust is a listed property trust investing in high-grade office property in Australia, United States, Western Europe, and Japan. Talking to
10 us today about the Trust performance and activities for the period to the 30th of June 2008 is the Chief Executive Officer, Adrian Taylor. Adrian, thanks for joining us today.
MOF Thank you.
15 BRR Adrian, can you please tell us about the Trust’s highlights over the past 12 months?
MOF Certainly. Looking in a challenging global financial market, the management focused on real estate fundamentals to deliver earnings of above forecast. And our strategy has incorporated a strong portfolio and asset management
20 focus. This is including making selective assets sales and using those proceeds to reduce gearing and strengthening the Trust’s balance sheet. So to summarize, the profits for the year ending 30 June 2008 was A$208.7 million and our distributable earnings were up 8% to A$278.1 million which represented 13.6 cents per unit. We achieved 4.5% like-for-like net property
25 income growth and our portfolio occupancy of 96% included a weighted average lease term of about 5.2 years. Our average rent review increased to 5% and our portfolio remains under rented at about 7% below market. Net tangible assets for $1.52 per unit or $1.63 if we exclude our deferred tax liabilities. Our asset sales during the period contributed A$50.5 million to
30 earnings with proceeds partially used to repay debt. And we’ve also agreed refinancing terms for all of our debt facilities which mature in 2009 financial year.
BRR Adrian, how are the individual portfolios performing?
35 MOF Well, despite the challenging global economic conditions experienced over the year, leasing activity has been robust, with more than 140,000 sqm leased. And this has provided a relatively stable occupancy at 96% across the whole portfolio and solid like-for-like property income growth of 4.5% and a weighted average lease expiry of 5.2 years. In Australia, office markets
40 have witnessed a very strong year with vacancy rates in major cities at historic lows, resilient demand and rental growth in many markets at double digit rates, and most are still well below previous peak real rents. At June 2008, the Trust's Australian portfolio was 99.9% occupied, and having delivered a strong 9.2% like-for-like property income growth over the year.
45 The US submarkets were more diverse. Demand for high quality office space continued to see leasing transactions at competitive rents in some markets, but there were slowing in others. By proactively leasing some space ahead of our lease maturity, our occupancy was maintained at the solid 94.2% wherein we leased more than 700,000 sqft over the year despite only having 490,000 sqft expiring. So in other words, we are proactive on that front. In Europe, demand remained strong despite a decline in business confidence. Leasing was largely characterised by shift to more contemporary space with larger floor plates. And we are able to capitalise Trust management. We are able to
5 capitalised on the shift in market preferences, most notably with our City Central asset in Milan, with occupancy growing from 26% to 78% since October 2007 when we acquired it. In Tokyo, new supply has added some competition in the market. And this, together with the global credit tightening, has impacted market occupancy and affected rental increases. Despite this,
10 the Trust has leased 60% of our portfolio since acquisition in September 2007, including retaining its customer at Morita to retain 100% occupancy for that asset.
BRR Adrian, can you talk us through your change to capital management policies?
15 MOF Yeah. Look, in response to the disruption in global capital and property markets and the position of Trust to be able to capture future opportunities, the Trust is implementing revised policies with the objectives that, firstly, earnings are transparent and so we can focus on core property income Secondly, the distributions are sustainable and reflect underlying property
20 earnings; And thirdly, that maintenance capital expenditure is funded from operating cash flow. And these objectives will be achieved through various policy measures including, resetting US income hedges to market rates and realising approximately $50 million of values from the prior contracts; then revising the US capital hedging policy to protect between 70% and 100% of
25 our gross offshore assets. And in this process, the Trust will lock in about $45 million of value from the original contracts. And also revising the Trust’s distribution pay out policy, which is really a capital management initiative. The Trust will now pay out our core earnings after retaining cash to fund our maintenance capital expenditure. Core earnings will exclude profit or loss on
30 asset sales and income derived from capital hedges. So in a normalised year, the pay out ratio is expected to be approximately 90% of core earnings. So these prudent initiatives that really aim to providing a platform for sustainable and growing distributions. They provide about $95 million of liquidity and help preserve equity value for all unitholders. This also promotes a stronger
35 balance sheet into the future and assists in debt refinancing in late 2009, all of which are key management priorities in the current environment.
BRR Adrian, just finally, what is the outlook for Macquarie Office Trust?
MOF For the 2009 financial year, management forecast headline earnings before
40 any asset sales of 10.3 cents per unit, less than the 11.2 cents per unit which we paid in the 2008 financial year. This 8% movement is due to the removal of unsustainable foreign currency hedging rates and also the effect of reduced gearing via asset sales and increased borrowing margins. In 2009, our core earnings are expected to increase 3% from 9.3 cents to 9.6 cents
45 per unit. The distributions are expected to be 9 cents per unit. In light of recent developments in global financial markets, which are now impacting the broader economy and with the continued uncertainty in the short to medium term, we believe revising our capital management policy is a prudent approach and aligns the Trust more closely with global REIT practice.
BRR Adrian, Thanks very much for your time.
MOF Thank you.
INTERVIEW CONCLUDED
Contact brr@brr.com.au for more information
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