Precinct's $500m plan for tower

Artwork for a tower that former owner Westfield NZ could have built.

Building due to start in 2016 as landlord plans to spend up to $500m on prime site

The $1.7 billion landlord Precinct Properties will spend up to $500 million building its new Downtown tower near Auckland's waterfront.

The NZX-listed business, which yesterday released its annual result, revealed fresh details of the plans that include a scheme to privatise some of Queen Elizabeth Square.

Precinct revealed it would now spend $400 million to $500 million, maximising the opportunities offered by the CBD site and gross floor area potential with a soaring tower.

NH Architecture from Melbourne has been appointed to design the 20,000sq m of retail space, Woods Bagot is the commercial architect on 35,000sq m of commercial area and Warren and Mahoney is executive architect on the site bounded by Lower Albert St, Customs St and the square and where a consent was granted to former owner Westfield NZ for a 41-level tower.

Building work is due to start in the first quarter of 2016, the shops are to be finished by 2018 and the offices by 2019. But a development agreement is yet to be concluded over the $2.4 billion City Rail Link. Precinct said the tower design phase is not yet finished but resource consents could be lodged around December.

Shane Solly of Harbour Asset Management said there was a big increase in the size and scope of Precinct's Downtown redevelopment.

He was satisfied with the result which showed a good return on repositioning the business headed by Scott Pritchard over the last few years.

Precinct suffered a $40.3 million drop in net profit after tax and unrealised gains but an NZX presentation showed its portfolio was 98 per cent occupied and operating income rose 9.4 per cent.

Its strategy is to reposition its portfolio through buying and selling properties, increasing its weighting towards Auckland real estate investments and developing higher quality assets.

Solly has noted how the market for prime buildings was so tight that big landlords such as Precinct and Kiwi Income Property Trust can't buy A-grade office blocks so are being forced to develop their own to meet tenants' demands and keep portfolio quality high.

Yet those NZX landlords are also primarily investors, not developers, putting them in a potentially invidious position because investors perceive higher risk with more development.

Precinct shares closed down 3c yesterday at $1.095.