$148m revaluation gains help drive Precinct Properties' interim profit 213%

Big revaluation gains of $148.5 million boosted Precinct Properties' half-year profit, with the company, which owns Commercial Bay, declaring a $167.9m net after-tax profit, up 213 per cent.

But revenue also rose 25 per cent to $97.1m for the six months to December 31, 2020.

The company said it had an active period of leasing and finishing developments which led to a 15.7 per cent increase in operating income before indirect expenses to $62.5, up on the previous $54m.

"A strong half-year portfolio revaluation of $148.5m has contributed to total comprehensive income increasing to $167.9m, up 213 per cent compared to the prior period of $53.6m. The solid performance was supported by an uplift in operating income following completion of developments and a positive tax outcome from the depreciation on structure and prior period contamination expenditure," the company said today.

Chief executive Scott Pritchard said "We are pleased to announce another strong result with the portfolio continuing to illustrate its resilience and performance in these uncertain times. While market conditions remain challenging in 2021, we continue to see demand for high quality, city-centre office space with surrounding amenity. With a further 11,300sq m of leasing transactions completed in the period, the portfolio continues to attract businesses who want to occupy premium assets and be in highly attractive locations.

Precinct's Scott Pritchard. Photo / Babich Martens

"While the debate around workplace strategies continues, pleasingly almost all of Precinct's clients were back and working from their premises prior to the 15th of February 72-hour lockdown.

"Noticeably, some clients have increased their allowance for flexibility, however, this varies dependent on the role and industry. With a portfolio that is 98 per cent leased, and on floor occupancy levels averaging between 85 per cent and 90 or cent, our clients are clearly recognising the value of face to face working. Precinct's buildings encapsulate these benefits given their city-centre location, premium quality, and surrounding amenity," Pritchard said.

Gearing is low at 29.9 per cent and the company cited its recent sale of the remaining stake in the ANZ Centre on Albert St for $177m.

Precinct shares are trading down around $155, having reached $1.91 around this time a year ago pre-pandemic lockdowns.