AMP NZ Office Trust Sets MCN Rights Issue Rate

AMP NZ Office Trust sets rate for its MCN Rights Issue

8.5% pa minimum interest rate set for Mandatory Convertible Note Offer

AMP NZ Office Trust (ANZO) today confirmed that investors in its Mandatory Convertible (MCN) Rights issue would receive a minimum annual interest rate of 8.5%.

The final interest rate will be the greater of 8.5%, or the three-year swap rate plus a margin of 2.00% (to be notified to NZX on 13 July 2004).

Existing Unitholders will be offered two MCNs for every nine Units held in ANZO at 5.00pm on 11 June 2004 at a price of $1.00 each, with rights of renunciation. New investors will be able to purchase rights where existing Unitholders elect to renounce their rights.

The offer is expected to raise approximately $95.2 million in new capital for ANZO, New Zealand’s largest prime office property portfolio, which will be used to partly fund the acquisitions of the Mobil on the Park Building and State Insurance Tower in Wellington.

“The interest rate on the MCNs makes them a strong value proposition. Because the interest rate is fixed until the MCNs convert, the investment will provide consistent cashflow returns for investors,” said ANZO’s Executive Manager Rob Lang.

“Investors will benefit from any capital appreciation of the Units above 92 cents per Unit by the conversion date, as the MCNs convert on a dollar for dollar basis at the lower of the market price (less 2%) of the Units prior to conversion or a Unit price of 92 cents. After conversion, MCN holders can choose to retain their investment in Units, or to sell those Units.”

Mr Lang said the Mobil on the Park Building and State Insurance Tower were landmark properties and their acquisition would strengthen ANZO’s core portfolio. “The acquisitions will bring significant strategic and operational benefits for ANZO Unitholders, including improved strategic positioning, increased tenant diversification and portfolio occupancy rate, reduced over-renting and improved rental growth prospects.”

The acquisitions represent a projected $900,000 (0.2 cents per Unit) increase in earnings (excluding capital raising costs) that will accrue to AMP NZ Office Trust in the 2005 financial year.1 This improvement has enabled the Manager, AMP Ronin Management Limited, to increase the full year 2005 distribution projection to 7.20 cents per Unit, up from the 7.0 cents being paid in the 2004 financial year.

The MCNs will have exposure to the highest quality pure office portfolio in New Zealand and a blue-chip tenant base. ANZO’s portfolio currently comprises eight prestigious properties in the Auckland and Wellington CBDs valued at $613.1 million*, including HP Tower, No. 1 & 3 The Terrace, 125 The Terrace and Pastoral House in Wellington, and the ANZ Centre, PricewaterhouseCoopers Tower, Quay Tower and IAG House in Auckland. The acquisition of the Mobil on the Park Building and the State Insurance Tower will lift the portfolio’s value as at 30 June 2004 to $759.1 million.

Tenants include The Treasury, Bank of New Zealand, Westpac, ANZ Bank, Mobil Oil, IAG, Air New Zealand, PricewaterhouseCoopers, AMP Limited, Chapman Tripp, Bell Gully, Russell McVeagh, Minter Ellison Rudd Watts, Buddle Findlay, HP Invent, and Vodafone.

ANZO’s experienced management team has also identified value-adding opportunities in the new properties. “The acquisitions improve our ability to meet changing business needs and to offer a broader range of accommodation options from within our portfolio. This in turn will contribute to enhanced long-term tenant retention and reduced cash flow volatility,” said Mr Lang.

The offer will open on 14 June 2004 and close on 8 July 2004, and has been fully underwritten by ABN AMRO Rothschild. Quotation of the MCNs is expected to occur on 15 July 2004. The MCNs will convert on 30 June 2007 (or earlier in specified circumstances).

Ronin Property Group, through a subsidiary, Ronin Property NZ Limited, is the largest Unitholder in ANZO with 30% of the Units on issue. Ronin Property Group is fully supportive of the Offer, and has committed to the Underwriter that its subsidiary’s entitlement to its share (30%) of the MCNs will be taken up.

ANZO’s second largest Unitholder, AMP Property Securities Fund (managed by AMP Capital Investors (New Zealand) Limited), has agreed to renounce its entitlement in favour of the Underwriter, which proposes to offer this entitlement to investors.

About ANZO

ANZO is the owner of New Zealand’s largest prime office portfolio. It is managed by AMP Ronin Management Limited, a joint venture company formed in December 2003 by AMP Capital Investors (New Zealand) Limited (AMP Capital) and Ronin Funds Management Limited. The acquisitions will bring AMP NZ Office Trust’s total portfolio to 10 office properties, valued at approximately $760 million. *The portfolio has been revalued as at 30 June 2004.

1 Subject to certain assumptions set out in the investment statement and short form prospectus for the offer - Ends -

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