QV lists the building's owner as No 1 Queen Ltd whose directors the Companies Office shows as Parnell's Chong Du Cheng and Milford's Kerry Joel Knight. Auckland Council's website showed the block valued for rating purposes at $72 million in July, 2011.
But Pritchard defended the price being paid.
"If you go through most of those rating valuations, they tend to be a bit lower than where the market value is," he said.
The purchase was no land grab.
"We wouldn't demolish No 1 Queen St because it has 1000sq m office floor plates with uninterrupted views of the harbour.
"But it's how you include that in the master plan and make sure it gets the benefits. Also there's some undeveloped potential with air rights on the northwestern corner. Because we own the adjacent site, there's an ability for us to do something on that site," he said.
Of the 17 levels in the block, levels six and 10 are vacant but the vendor has given a six-month rent underwrite on the empty 2300sq m, Pritchard said.
Precinct's borrowings will rise from $535 million to $635 million and its gearing increases from 33.5 per cent to 37.5 per cent.
But Pritchard is also predicting the big spend will be offset by a major new revenue stream, saying the asset had superior prospects for rental growth.
The deal is due to settle in five months and is subject to Overseas Investment Office and Precinct board approvals.
Forsyth Barr's latest listed real estate sector review said Precinct had "turned the corner from an earnings, cash flow and valuation perspective. We have become more confident about Precinct's ability to lease up its vacant space in a timely manner given the tightening of high quality premium space in the Auckland and Wellington CBDs. Our recommendation is accumulate," it said this month.
Precinct had a 2013 dividend yield of 7.2 per cent, 90 basis points below the sector average but it also has a portfolio dominated by high quality assets, Forsyth Barr said.
" ... prime office property values have significantly more upside once market rents recover than prime industrial or prime retail assets whose asset values have held up relatively well through the downturn".
Precinct's shares are trading at $1.03, just below a 12-month high of $1.05.
No 1 Queen St/HSBC
* Built in 1972
* Refurbished late 1990s
* Former HQ: Capital + Merchant Finance, Bridgecorp
* 21-level tower, 88 per cent occupied
* 1160sq m shop space
* 127 carparks
* Tenants HSBC, Baldwins Intellectual Property, NZ Transport Agency
* Conditional offer to sell to Precinct Properties NZ.
