The $1.6 billion landlord Precinct Properties expects to start redeveloping its Downtown Shopping Centre site in Auckland's CBD above the new Central Rail Link in two years.
In an investor presentation issued with its interim result yesterday, the company said works should start by 2016 and it was in talks with Auckland Council over the huge scheme, planned to transform the waterfront end of the city and link up nearby Precinct properties.
"Negotiations with the council to co-ordinate the timing of works with the building of a tunnel is progressing well," the company said.
Precinct and the council had common interests which would help reduce disruption to each other's projects, enable cost savings and co-ordination on the master planning of the tunnel and the tower to rise above it, the company said.
A $350 million, 30-level tower on the site between Lower Albert St, Customs St and Queen Elizabeth II Square opposite the Ferry Building on Quay St was initially planned by Westfield last decade. It sold the site to Precinct, which is advancing plans for a huge new mall and office tower.
Precinct also announced it might build the Wynyard Quarter's new innovation hub because it was in talks with the council's Ateed arm.
Precinct's net after-tax interim profit to December 31, 2013 rose from $23.6 million to $39.5 million. Carlie Eve of Mint Asset Management was pleased with the result.
"It was in line with expectations, the earnings uplift driven by leasing activity, acquisitions and the completion of the ANZ redevelopment," she said.
Precinct would be a strong development partner in the Wynyard Quarter and the company had more of a focus on redevelopment work with the Downtown job and work also pending on Wellington's Bowen Campus. "The good thing about Wynyard is that the lease structures are much better, giving greater certainty, than those with private operators," she said, recalling how Kiwi Income Property Trust had pre-paid its ground rent in the area for ASB North Wharf for a 90-year term.
Precinct had indicated their Wynyard innovation precinct would also have a pre-paid leasehold structure. "The result also confirms there is strong momentum in Auckland office rents, Precinct commenting that their leasing and reviews in Auckland were 6 per cent ahead of June valuations."
Scott Pritchard, CEO of the business with 300 tenants in 17 landmark buildings, said the outlook for prime CBD offices continued to strengthen and the sector had low vacancy levels.
Guidance for 2014 was unchanged and Precinct traded around $1.03.