An artist's impression of plans for two new towers on the Downtown Carpark site. These are gold in colour and slightly to the left of the centre of this image. Photo / Precinct Properties
An artist's impression of plans for two new towers on the Downtown Carpark site. These are gold in colour and slightly to the left of the centre of this image. Photo / Precinct Properties
Listed $3.3 billion real estate investment and development business Precinct Properties pushed up operating profit in the latest half-year, citing a return-to-office trend and confirmed full-year dividend guidance.
The company, which owns a multi-billion dollar portfolio, made $76.6 million operating profit before expenses in the half-year to December31, 2024, up on the previous $73.4m.
Precinct Properties' plans for Pumanawa Downtown West: two towers on the Downtown Carpark site. This shows the two new towers to the right, with SkyTower on the far right.
Net profit after tax for Commercial Bay’s owner fell from $15.3m to $9.2m, partly due to higher interest rates with those expenses rising from $16.4m to $29.1m. Debt drawn stands at $1.4b, up on the $1.3b previously. Gearing stands at 39%.
Net property income of $71.4m (1H24 $68.4m) reflected robust leasing performance secured during the period achieving a positive leasing spread, the company said.
Devaluations were less harsh: previously -$5.5m but only -$800,000 in the latest half-year.
Precinct’s office occupancy was 96% and weighted average lease term 6.3 years. It has leased 6450sq m (1H24: 5585sq m) in the latest half-year and said it was pleasing that those new leases were 22.8% above previous contract rents.
Precinct chief executive Scott Pritchard in front of the company's holdings: almost two downtown waterfront blocks. Photo / Michael Craig
The company says it is optimistic about its medium-term “and is on track to deliver $4b to $5b of capital partnerships in the medium term”.
And while Fletcher Building and SkyCity Entertainment Group suspended dividend payments, Precinct confirmed dividend guidance of 6.75cps for FY25, consistent with the previous period.
Chief executive Scott Pritchard said the portfolio had continued to perform well during the first six months of the financial year, demonstrating the underlying resilience of Precinct’s assets against the backdrop of a prolonged weak New Zealand economy.
Securing leasing transactions with a positive leasing spread reflects the office portfolio and the demand for premium-grade space.
The new $1b PwC Tower at Commercial Bay.
Trading performance at Commercial Bay’s retail precinct had been encouraging with a consistent level of sales recorded demonstrating the quality of the enhanced retail mix at the centre, a strengthening city centre, and increased events taking place in Auckland, he said.
“This includes three under-construction build-to-sell residential development projects totalling $431m on behalf of capital partners, securing our next phase of new development opportunities including a substantial residential build-to-sell pipeline, and a well-located purpose-built student accommodation pipeline which we expect to commit to in the coming months,” Pritchard said.
A highlight lately had been delivering new offices for Beca, which left Pitt Street for Precinct’s new purpose-built Viaduct premises.
“Post balance date, we are pleased to have managed the delivery of the premises at Beca House on time for Beca’s occupation, demonstrating Precinct’s strong track record and development expertise to deliver large-scale development projects on behalf of its capital partners.”
Wynyard stage three was hit by cost overruns due to elevated construction market activity. The project completes the final stage of the Wynyard Quarter Innovation precinct, one of the largest urban regeneration projects in New Zealand, with a total realisable value of about $550m encompassing 48,000sq m of premium office space across five campus buildings, the company said.
Precinct’s development project at 61 Molesworth St, Wellington, was on target for completion in Q4 2025.
Many new Auckland apartment projects are under way. Fabric stage two in Onehunga and the Domain Collection in Newmarket were on budget and programme, the company said.
Construction works at Parnell’s York House had started. Precinct has progressed its joint venture with Orams Group with the transaction settled during the period. The commercial development comprising 3500sq m of office and marine-related space, as well as car parking, has started.
Precinct issued an upbeat outlook: “FY25 may see our dividend payout ratio modestly exceed 100% of our adjusted funds from operation”.
“With a focus on providing a long-term stable dividend profile for our shareholders, Precinct’s dividend policy has been to pay out approximately 100% of AFFO as dividends. Over the last 10 years, Precinct’s AFFO payout ratio has averaged 101%.”
Anne Gibson has been the Herald’s property editor for 25 years, written books and covered property extensively here and overseas.
