This article is from the Australian Property Journal archive
ING Office Fund has unveiled an exit strategy to offload its $2.675 billion global property portfolio and repatriate capital back to Australia.
IOF yesterday reported an operating income of $151.2 million for the 12 months to June 30 up from $146.9 million in the previous corresponding period. The fund delivered a statutory profit of $42.5 million which was largely influenced by negative asset revaluations in the first half of the year – but is an improvement compared to a statutory loss of -$764.2 million in the pcp.
CEO Tino Tanfara said IOF has delivered a very sound result in the face of a challenging operating environment over the past 12 months.
IOF declared a distribution of 3.9 cents per unit for FY10, down from 9.6 cps in FY09.
As at June 30, IOF’s overall portfolio occupancy was 93% led by Australia 98%, Europe 92% and US 84%. But tenant retention was low at 60%, particularly in Australia 57%, Europe 100% and US 63%. Like-for-like net property income growth was 1.0% driven by Europe +5.9% and US 8.7% with Australia behind at +2.7%.
During the year, 98% of IOF’s portfolio was externally valued and the weighted average capitalisation rate remained steady at 7.5%. Gearing decreased to 23.2% from 25.7%.
Tanfara said there are clear signs that asset values have stabilised and in some instances upward improvements in value are evident. These positive improvements are attributable to both solid occupational conditions in select Australian markets and improved investment demand in select US locations.
Meanwhile in the year ahead, he announced that the fund has realigned its strategic focus to concentrate on Australia and will conduct a phased withdrawal from its current off-shore markets over time.
“Firstly, the strategy focuses our investment into markets where IOF has strong internal capability to actively drive performance; and secondly, we believe that over the longer term Australia will provide better risk adjusted returns,” he added.
“In order to maximise unitholder returns from our off-shore investments, we will only sell these assets after taking into account market conditions and expected future returns. Management has already commenced the implementation of this strategy as demonstrated by the recently announced conditional sale of Park Tower, Northern Virginia which is expected to be sold at a premium to book value,” he continued.
The fund is continuing discussions to divest part of its €251.0 million investment in the Dutch Office Fund.
He added that the proceeds from the sale will be redeployed to Australian CBD assets.
Tanfara indicated that for FY11, the fund will deliver operating income per unit of 5.2 cents and distributions per unit of 3.9 cents.
Australian Property Journal
