Commercial Bay was revalued. Photo / Jason Oxenham
Commercial Bay was revalued. Photo / Jason Oxenham
Revaluation of Auckland's new $1 billion office/restaurant/shopping Commercial Bay tower helped its owner push up its portfolio worth by $162 million to reach a $2.8b total.
Precinct Properties, developing the tower on Auckland's waterfront, reported preliminary revaluation gains which it said included Commercial Bay.
View from the 37th floor. Photo / Warren and Mahoney
Scott Pritchard, Precinct's chiefexecutive said, "Our development projects have again made a significant contribution to our revaluation gain, in particular, Commercial Bay which has achieved further value accretion following continued leasing progress and increase in its expected value on completion."
This year, revaluations saw a $162m uplift in portfolio values, although last year that figure was much higher at $208.7m, Precinct said, adding that its portfolio valuation now stood at $2.8b.
"This recorded gain will increase the value of Precinct's portfolio to around $2.8 billion at 30 June 2019, providing an uplift of 12 cents in Precinct's NTA per share from $1.38 to around $1.50 per share," the business said.
No details on which properties had risen in value fastest were provided. The statement only referred generally to the portfolio, geographic location, factors influencing value rises and Commercial Bay.
Exactly how much Commercial Bay has risen in value, before it is completed by Fletcher Construction, was unstated. Why this year's gains were so much lower than last year's was also not commented on.
A spokesperson for Precinct said: "The value of Commercial Bay has not materially changed from last year, being valued at just over $1b. The increase in the value of the assets was split between Auckland and Wellington ($124m and $38m respectively) and was driven by an increase in market rents and a reduction in cap rates."
Draft asset valuations were carried out by independent valuers but are subject to final audit and will be confirmed in the June 30, 2019 full-year result, out on August 16.
Auckland asset valuations rose 6.5 per cent and Wellington 5.4 per cent, due to rental growth, capitalisation rate compression and leasing activity.
Wellington rent rises were limited due to rising rates and insurance premiums, the company said.
Pritchard said the $162m rise confirmed the strength in occupier markets.
"The portfolio is also benefiting from the strong investment demand for premium inner-city business space, particularly in Auckland," Precinct said.
Workers on L37. Photo / Warren and Mahoney
Jeremy Simpson of Forsyth Barr issued an analysis of Precinct in May headed "late cycle gains" and referring to a $1.5b development pipeline "both improving the quality of its portfolio and growing earnings per share. We are positive on the value Precinct is creating through its development which are expected to generate a further $180m (15cps) of profits once complete".
Simpson put a neutral rating on the shares.
Commercial Bay was tracking on budget "albeit timing for the retail component has been delayed".
Office pre-leasing is at 80 per cent and retail at 84 per cent, Simpson noted.
Commercial Bay was revalued. Photo / Jason Oxenham
On June 12, Commercial Bay was topped off, with executives from around the world in Auckland to mark the event at the tower where cladding had reached near the top.
Mayor Phil Goff, as well as representatives from architects Warren and Mahoney in Auckland and Woods Bagot in Australia, and Fletcher Construction and Precinct staff attended.
The tower is taking much longer to build than initially expected. In late May, Precinct announced it would not only take even longer but also cost more.
The total cost for the redevelopment of the former Downtown shopping centre at the bottom of Auckland's Queen St would now be $690-$700m, versus its February forecast of $690m, Precinct said in May.
And the shops planned to open beneath the tower will miss their second Christmas.
The retail centre won't be completed until March next year and the PwC office tower won't be done until April next year. Originally, the retail centre was expected to open by October 2018, with the office tower completed by mid-2019.
