The new PwC Tower at Commercial Bay. Photo / supplied
The new PwC Tower at Commercial Bay. Photo / supplied
Australian and Middle Eastern interests have agreed to sell the management contracts of one of New Zealand's biggest listed real estate vehicles for $215 million.
Sydney-headquartered AMP Capital Investors and a subsidiary of the Abu Dhabi Investment Authority will terminate their management deal with Precinct Properties.
AMP Haumi Management saidit had agreed to end that for a one-off payment of $215 million, which Precinct said would result in annual savings of $14.6m.
The management business was a joint venture between the two businesses for what was previously called the AMP NZ Office Trust.
Craig Stobo, Precinct's independent chairman, said today the Australian and Middle Eastern management had helped create significant value for Precinct shareholders, growing the business in the last decade.
Precinct's market capitalisation today stands at $1.3b and shares are trading today around $1.65, up 5c or 3 per cent in the last year.
PFI internalised its management in 2017. Many other listed property vehicles in this country internalised their management agreements some years before.
Asked if Precinct had been slow to internalise compared to other listed entities and why the timing was now, Stobo said: "This is an event that stems from the announcement by AMP in Australia to review all their assets internationally. In September last year, the AMP board decided to undertake a strategic review of their assets.
"I convened a group of independent directors to approach AMP to purchase their stake in the management company. Apart from myself, independent directors were are Launa Inman, Graeme Wong and Anne Urlwin," Stobo said.
"Internalisation was never possible without one of the two agreeing to sell their stake," he said.
The change would position the company for future growth.
Mohammed Alnuaimi, a Precinct director. Photo / supplied
The purchase was an appropriate progression "considering the scale and breadth of Precinct's business. As a result of this transaction, $10m of fees on current development projects are no longer required to be paid," the company said.
Precinct will apply for an Inland Revenue ruling to confirm the termination payment is deductible for income tax purposes so the net cost to Precinct might be $145m.
Chief executive Scott Pritchard, deputy chief executive George Crawford and chief financial officer Richard Hilder have been retained under new employment agreements.
All other employees of the manager have entered into new employment contracts with Precinct, the company said.
Precinct Properties' chairman Craig Stobo. Photo / Dean Purcell
The board will remain unchanged through the transition. Mohammed Alnuaimi will retain his board seat as a representative of Precinct's largest shareholder with a 17.3 per cent stake.
Chris Judd and Rob Campbell as non-executive directors and eligible for election at this year's AGM.
"The last day of the old structure is Wednesday and on April 1, we commence with the Precinct board in complete control of staff, strategy and our future," Stobo said today.
Precinct developed the new $1b Commercial Bay on Auckland's waterfront and Stobo said today what a credit to the business that building was.
In Auckland it also owns Auckland's HSBC Tower, AMP Centre, Jarden House, 1 Queen Street, Mason Bros Building, 12 Madden St, 10 Madden St and it has announced recently it will sell the remaining half in the ANZ Centre on Albert St.
In Wellington it owns the AON Centre, NTT Tower, No. 1 and No 3 The Terrace, Mayfair House and Bowen Campus.
