This article is from the Australian Property Journal archive
Tishman Speyer Office Fund has posted a 31.9% drop in full year net profit to $A71.4 million for the year ending June 30, 2006 – compared to $104.915 million in 2005.
However, the trust’s operating earnings, which property revaluations jumped 91% to $49.4 million from $25.886 million in 2005.
Operating earnings are also 1.3% ahead of PDS on a per unit basis.
Tishman Speyer Australia’s chief executive Tom Feldstein the result in line with PDS forecasts, achieved during a period when the fund has been reinvesting in the value of the portfolio.
“Our approach to long-term value creation has been pursued during a period where we are witnessing substantial changes in property market conditions across the globe and a compression in yields across all asset classes. Demand for property has brought increasing prices, while at the same time costs of debt funding have been increasing.
“With this confluence of factors, there now exist exciting opportunities for managers such as ourselves. With a vertically integrated management platform and a focus on active management and total returns from investments, we are in a position to deliver opportunities to investors not accessible to passive or financial managers.” Feldstein said.
In the 12 months, new and expansion leases covering 520,000 sq ft and 552,000 sq ft of renewal leases were signed. As a result, the portfolio is now 93.9% leased.
“Over the last year TSO has benefited from the continued strength in the U.S. real estate markets, which has allowed us to complete significant leasing transactions throughout the portfolio,” Feldstein said. “We have also strived to improve the composition of our portfolio with the acquisition of Bayside, Lakeside and 550 Terry Francois Boulevard, all high quality assets located in growth markets.”
“Leasing and management efforts have resulted in both an increase in the percentage of the portfolio leased and an improvement in the medium term lease profile of our assets, with specific focus on management of lease expiries in 2007 and 2008. Today our percentage leased is almost 2% higher then at listing and our weighted average lease term is longer as well.
“On the debt front our exposure to changes in short term rates remains limited, and over the longer term our portfolio remains well protected from changes in interest rates for the next 6.5 years. All in all we believe the portfolio is well positioned for the future and we continue to believe that our collective efforts to enhance the underlying value of TSO’s property portfolio translates into better investor returns,” Feldstein said.
Barring unforeseen circumstances, the trust will pay a distribution of 17 cents per unit for the 2007 financial year.
At June 30, 2006, TSO owns an interest in 14 office properties with a value of $1.11 billion compared to $663.645 million in 2005.
By Adam Parsons
