Precinct's PwC Tower at Commercial Bay. Photo / Supplied
Precinct's PwC Tower at Commercial Bay. Photo / Supplied
Precinct Properties New Zealand made only $600,000 profit in the latest half-year, well down on its $40.7m previous bottom-line profit a year ago.
The landlord, which developed the $1b downtown Auckland Commercial Bay and its PwC Tower, released its result today for the December 31, 2021 half-year.
Gross operating revenuerose from $96.9m to $110.2m. Devaluations were mainly responsible for the profit change.
“Total comprehensive income after tax of $0.6m compares to $40.7m for the same period last year, with the difference mainly attributable to the fair value movement across the value of Precinct’s properties of $53.6m recorded in the current period.”
Shareholders will get a second-quarter dividend of 1.675 cents per share.
Strong first-half leasing and rental growth drove property income to $66.6m, up 9 per cent on the previous $61.1m.
The company cited its potentially biggest planned new project, having been elected as preferred development partner for the Downtown Carpark site in Auckland.
It also cited deals with Asian businesses to get access to more capital.
The company said it advanced a partnership with Singapore sovereign wealth fund GIC.
The Wynyard Quarter Stage Three development project will be acquired and completed by Precinct Pacific Investment Limited Partnership.
And the company agreed a new investment partnership with global private investment firm PAG. The partnership will acquire 40 and 44 Bowen St in Wellington on completion.
In addition, the company today referred to another new opportunity - building homes for the first time in its history, with entry into the multi-unit residential development market.
Despite the profit change, 98 per cent of Precinct’s properties are leased. Contracts show a 6.2-year weighted average lease term.
The half-year was described as strong from a leasing perspective, with market rental growth reflected in new deals.
That delivered an average uplift of 7 per cent on the June 2022 valuation rents.
Not all property was devalued. The company cited “no material value movement in the period for all assets apart from Commercial Bay Retail in Auckland and Defence House in Wellington”.
Retail in the new Commercial Bay Auckland waterfront mall has been hit by lockdowns, lack of tourists and a period when no cruise ships docked nearby.
Despite the valuation movement, Commercial Bay Retail had a solid level of sales performance over the last six months, recording its strongest sale period since opening.
Pedestrian flows recorded at the centre are now well above average levels.
Chief executive Scott Pritchard in front of the company's holdings: almost two downtown waterfront blocks. Photo / Michael Craig
Scott Pritchard, chief executive, emphasised strong new leasing deals across the portfolio.
“The occupier market for prime space continues to perform extremely well with continued demand and strong market rental growth. We are seeing this firsthand in the significant demand for our assets and in the rental levels achieved”.
Precinct had completed several key deals in the half year.
A new investment partnership with PAG and growth from the real estate investment partnership with Singapore sovereign wealth fund GIC showed the demand for joint investment into high-quality assets and big development projects, Pritchard said.
“These transactions have extended our real estate offering and are supporting Precinct to achieve its growth aspiration to create long-term sustainable value”.
Planning new apartments with Lamont & Co. supported a core strategy for mixed-use precincts.
“It complements the overall strategic direction of our business and represents a natural extension for Precinct,” Pritchard added.
During the last six months, the company had continued to work on the Downtown Carpark deal where it was picked as the preferred development partner with Eke Panuku.
The company remained in commercial negotiations about that deal.
Works on 124 Halsey St just passed the first anniversary. The pre-leasing to Beca on a 12-year lease term over 14,000sq m required Precinct to commit to 117 Pakenham St to provide enough space to meet the engineering firm’s needs.
Construction is on at 124 Halsey St, 117 Pakenham St and the Flowers Building.
Those make up the Wynyard Quarter third stage, due for completion in 2025.
Construction has been progressing, with the basement excavation now complete and structural steel being erected.
Refurbishing the existing building at 1 Queen St to become the Deloitte Centre is now in advanced stages of construction.
A facade installation to the hotel levels was completed at the end of last year. That project is on schedule to finish later this year.
That was for two Auckland and two Wellington office blocks. But Precinct retained a 50 per cent interest in those buildings through a newly established entity.
Precinct Pacific Investment Limited Partnership - half the Kiwi landlord and half Reco Pacific Private - will jointly own Wellington’s Charles Fergusson Building at 38 Bowen St and Mayfair House at 54 The Terrace in Wellington.
The partners will also own 10 and 12 Madden St in Auckland’s Wynyard Quarter near the waterfront.
Many civil servants work in the two Wellington buildings. All four were listed as being worth $382,505,302.
Shares in the company have been trading around $1.26, down 20 per cent annually, giving a market capitalisation of $1.9b.
