Archive | Wynyard Quarter

One condition left on Central Park sale, and Air NZ extends at Fanshawe St

Goodman Property Trust manager Goodman (NZ) Ltd said yesterday its sale of Central Park at Greenlane had all but gone unconditional, with only Overseas Investment Office approval still required.

The trust has also secured a new long-term lease commitment from Air NZ on its Fanshawe St headquarters.

Goodman (NZ) chief executive John Dakin said yesterday the $209 million Central Park sale to a joint venture led by New Zealand property fund manager Oyster Property Group Ltd represented a significant milestone in the repositioning of the Goodman trust, marking the last of its major identified asset sales.

“Following settlement of the property, the trust’s portfolio will be almost 90% invested in its preferred Auckland industrial sector and will have a value of $2.4 billion.

“With over $850 million of asset sales since 2012, we have positively rebalanced the trust’s portfolio, improving the quality & growth profile of the assets. It’s a disciplined strategy that is focused on the delivery of the industrial development pipeline and building a portfolio of unrivalled quality.”

Air NZ’s headquarters at 185 Fanshawe St.

The VXV precinct

The Goodman trust’s office investment is now focused in the VXV precinct of the Auckland waterfront Wynyard Quarter. The trust jointly owns the portfolio of 7 buildings with GIC Pte Ltd, the sovereign wealth fund of Singapore. The portfolio has a value of $488.4 million and Goodman’s proportionate share is $249.1 million.

Air NZ’s head office at 185 Fanshawe St is in that precinct. Trans Tasman Properties Ltd began development of the 6-level building in 2005, putting a $60 million value on it, but sold the development part-built to what was then the Macquarie Goodman Property Trust, with Air NZ as the incoming tenant.

Air NZ has renewed its lease for 10 years. Mr Dakin said that, and the Central Park sale, would increase Goodman’s portfolio occupancy to 98% extend the office portfolio’s weighted average lease term to 10.6 years and the overall lease term to 6.2 years.

Earlier story:
10 November 2017: Big property sale follows first-half profit setback for Goodman

Attribution: Company release.

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Precinct Properties targets future markets

Apart from confusion about whether to vote on director appointments by show of hands or by filling in paperwork, and uncertainty over what impact changes at Ports of Auckland might have, Precinct Properties NZ Ltd’s annual meeting yesterday was all forward progress.

The vote was an odd issue to get caught up in. When company chair Craig Stobo said the vote would be by hand, one shareholder asked: “Are you saying proxies don’t count?”

Shareholders Association representative Grant Diggle told Mr Stobo the association’s longstanding policy was to hold polls, for transparency, disclosure & good governance. Deputy chair Don Hulse – stepping in for Mr Stobo, who was one of 2 directors facing re-election – said the vote would proceed with a show of hands but, if shareholders demonstrated a strong desire for a poll, that would follow.

The vote was strongly in support of re-election and the poll was avoided. But, at another NZX-listed company meeting in the same building a few hours later, unitholders of the Vital Healthcare Property Trust voted by poll, the outcome was delayed, but nobody found it a problem.

Risk profile lowered, portfolio quality up

Mr Stobo said in his address to the meeting Precinct had reduced its risk profile as major developments were completed or passed construction milestones, and it was lifting portfolio quality.

Net profit after tax was up 17.3% to $162.1 million after achieving a revaluation gain of $77.5 million, and net tangible assets/share rose 6% to $1.24.

A bond offer, expected to be opened next week, will continue the company’s diversification of its funding sources. In September, Precinct raised $150 million of 4-year, fixed-rate subordinated convertible notes, reducing its gearing from 25% to 18%. Mr Stobo said both notes & bonds were capital management solutions which suited Precinct’s current strategy & opportunities: “It gives us the comfort of having the capital available to match our development commitments while ensuring that earnings are not diluted in the short term. Post-issue [of the notes], our committed gearing has reduced, supporting growth through a flexible funding option.”

Precinct reviewed its dividend policy last year, matching dividends with cashflow, as defined by adjusted funds from operations (AFFO), with the aim of producing a more transparent & sustainable dividend flow.

The company has indicated before that it expected dividends to rise as it advances its development programme. For the first quarter of the 2018 year, it’s lifted the dividend by 3.6% to 1.45c/share, and it expects to pay 5.8c for the full year (up from 5.6c), maintaining a 90% payout ratio.

100% occupancy

Chief executive Scott Pritchard presented a slide to the annual meeting to show the growth in portfolio occupancy, now 100%, and the weighted average lease term increasing to almost 9 years, then talked of how to improve performance further: “Precinct has always been a city centre specialist and we will continue to invest in high quality, strategically located office real estate. However, both the board & management believe that, to advance our position as a city centre specialist, considering a broader mix of real estate offers greater opportunity for Precinct to create value for shareholders.

“City centres around the world are enjoying a resurgence. We are taking advantage of this growth in a variety of ways. Commercial Bay is a great example, with Precinct developing a premium retail offering in the heart of the cbd. Fundamentally, we are growing in, and with, the cities we are part of.

“We have a clear strategy for creating vibrant environments with a broad retail, leisure and food & beverage offering. Our aim is to create precincts that our clients like working in, and that cbd residents, visitors & whole communities enjoy being in.”

Developing for the future

Perhaps one of the most important features of the strategy is to develop real estate for the future – a quite different view from developing property with an immediate cashflow in mind and extending it as long as you can.

“We currently have $900 million of developments which are underway and have identified a further $600 million development pipeline within our portfolio. This is a significant increase from 5 years ago, when the business had no development capability.

“…. Not only are our earnings growing, but we are also achieving a significant increase in portfolio quality. Achieving a positive result in all 3 measures [earnings, weighted average lease term as a result of development activity and the decline in the average age of the portfolio] is a great outcome and further reinforces the strength of our business.

“Our asset age has nearly halved, from 21 to 11 years. Along with an extended weighted average lease term & full occupancy, we have secured & advanced development in highly strategic locations. We have shifted more weighting to Auckland, which now accounts for 72% of our portfolio.

“Our focus on city centres, particularly Auckland, is very positive. With continued growth supported by key drivers such as net migration & tourism, we believe we are well placed to benefit from the city’s strong growth going forward.”

Commercial Bay at centre of change

Precinct’s biggest central city project is Commercial Bay, under construction between Queen, Customs, Albert & Quay Sts and above the rail tunnels into Britomart.

“Auckland is growing and this looks set to continue. And, like cities all around the world, it is seeing increasing centralisation. This slide illustrates the committed & forecast private & public investment in Auckland city. Most of the works are occurring in close proximity to Commercial Bay.

“A major focus for Precinct continues to be the extensive public regeneration which is set to occur on all streets surrounding Commercial Bay. Auckland is growing fast and billions of dollars are being invested in regional infrastructure such as the city rail link & new bus network. Of course, more recently there has been the commitment by New Zealand’s new government to a light rail system which will support Auckland city’s ongoing economic performance.

“Our research shows Auckland city centre population growth in 2016 was 17% and it is now growing 6 times faster than Auckland as a whole. With over 12,000 people moving to the city centre in the last 3 years, the population is already 15 years ahead of previous predictions of 45,000 people by 2032.”

As for Commercial Bay itself, Mr Pritchard said: “Having launched the project in 2015, we have gained an additional $88 million increase in the project’s value. Lease commitments have also increased to around 50% of the retail space and 66% of the office space. We are attracting leading corporate clients, and we are particularly pleased about the high quality of local & global retail & food brands choosing Commercial Bay. They will give Auckland a whole new retail & dining experience in the heart of the city.

“We are now forecasting a development profit for Commercial Bay of $213 million, reflecting a return on cost of 31%.

“Commercial Bay will include a range of food & beverage, including a communal dining offer designed by the legendary New York-based AvroKO, who are one of the world’s most respected names in hospitality design.

The name for this food offering is Harbour Eats, which is distinctively Kiwi, but AvroKO will bring the international flair. The 700-seat eatery will use plenty of natural greenery & foliage, making most of the open air atrium that will sit right at the waterfront location. This will be a truly world-class dining precinct.”

Wynyard Quarter

In the Wynyard Quarter, Precinct has completed stage 1 of its Innovation precinct: “The first stage of Wynyard consists of 2 buildings totalling around 13,000m² of office space. Achieving 100% occupancy upon completion of both buildings is a great result and we are delighted to see the development complete ahead of programme and consistent with budget. Precinct has achieved a development profit of 18%, or $16.2 million, on this project.

“Our involvement in this Innovation precinct shows how we are meeting different client needs in different ways, and our commitment to building strong partnerships. This is achieved through a joint venture with Panuku Development Auckland, an Auckland Council-controlled organisation, and on what is the last site left on Auckland’s waterfront.

“Our buildings here have a particular focus on sustainability & innovation. During the year, we acquired a 50% interest in Generator NZ Ltd, the co-working & shared office space provider. Quality co-working spaces are growing and are substantial businesses in cities around the world. We see the acquisition of a stake in Generator as being consistent with our strategic focus on building client relationships and increasing our service levels.

“This year Generator was also appointed by Ateed (Auckland Tourism, Events & Economic Development) to manage Grid AKL in the Innovation precinct, where it now operates almost 10,000m² of space and is leading an approach to co-working spaces we expect to see grow.”

Bowen Campus

In Wellington, Precinct’s Bowen Campus project is at the centre of a Government precinct: “As with Wynyard Quarter, we enjoyed both a revaluation uplift at Bowen and 100% leasing pre-commitment following the Crown exercising their right to lease the remaining vacant floors at the campus.

“The Kaikoura earthquake changed the fundamentals of the Wellington market, with many buildings still closed. With limited prime stock available, all research houses are predicting increased occupier demand. However, we too have been impacted following the earthquake, with Deloitte House being closed for a period and remaining largely unoccupied since it reopened in March. Investigations are continuing to be undertaken to try & identify the best solution for the property & its existing clients.”

Further opportunities 

Mr Pritchard said several more, attractive development opportunities available within its portfolio: “Our property at 1 Queen St is part of the Commercial Bay precinct and enjoys a prime waterfront location offering very good potential for further development as this whole area continues to grow.

“At Wynyard we have the option to develop 3 remaining sites covering 30,000m², and we are already in discussion with occupiers for stage 2, developing another 8000m².

“At Bowen Campus we can build a further 20,000m² of office space suitable for government & corporate occupiers.
“Each of these opportunities provides Precinct with feasible opportunities. We hope to commit to the second stage of Wynyard Quarter within the next year.”

Attribution: Annual meeting, presentation.

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Bidding war for Lighter Quay investment

Competition was tough at Ray White City Apartments’ auction today for a Lighter Quay Pavilion (pictured) leasehold unit, which has a record of high returns from short & medium-stay rents.

An Eden Terrace apartment was passed in.

CBD

Wynyard Quarter

Lighter Quay Pavilion, 79 Halsey St, unit 215:
Features: leasehold, 58m², one bedroom, secure basement parking space
Outgoings: rates $1656/year including gst; body corp levy $3100/year, ground rent $2920/year
Income assessment: $155/night shortstay currently; appraisals $155-170/night shortstay, $530-570/week long-term stay
Outcome: sold for $235,000
Agent: Krister Samuel

Isthmus west

Eden Terrace

Newton Rise, 121 Newton Rd, unit 3A:
Features: 93m², 2 bedrooms, balcony, parking space
Outgoings: rates $1545/year including gst; body corp levy $4772/year
Outcome: passed in at $600,000
Agents: Jean Ooi

Attribution: Auction.

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Grand downtown & waterfront plans raise the question: The money?

Some grand plans to advance Auckland Council’s 5-year-old waterfront & city centre plans will go to the council’s planning committee on Tuesday.

Image above: A Wynyard Quarter “regional destination park” is proposed at the outer point where the idea of an iconic structure was early tossed around.

2 words are central to the planning review: “Whose money?”

Take these 4 statements sprinkled through the report to the committee:

  • “The proposed funding & delivery scenarios are to be interrogated & tested during the long-term plan process. Priority projects will be supported by business cases, including a total value analysis. Once decisions have been made, they will be incorporated into the long-term plan public consultation.”
  • “For Wynyard Quarter, key drivers for the refresh include the need to create more feasible development packages, in order that returns from private development can contribute to the costs of public infrastructure & open space.”
  • “A realignment of the Wynyard Point park… delivering more rational development sites for private investment.”
  • “Funding is in place for the Auckland Transport bus projects but a realignment of or addition to budgets for other projects will be required.”

Those financial points are crucial to how streets around the central city and the waterfront itself are to offer better use, and how public transport will fit, but they aren’t the priority.

What is priority is to unleash a feast of ideas. What ought to be priority is a co-ordinated view of how these ideas can be brought forward practically, and funded.

Weighing on the offer are these:

  • The future of the port’s 2 functions, cruise & cargo
  • Hosting of the America’s Cup and hosting of the APEC (Asia-Pacific Economic Co-operation) meeting, both in 2021.

Devising a programme and working out the requirements for the yachting event make sense because it’s a mega-dollar occasion from which Auckland stands to profit enormously. The visit of the foreign politicians is one the city ought to be able to take in its stride.

The next round of publicly discussing the council’s future port study is scheduled for the planning committee’s October meeting. Again, money is the key feature – firstly, what Auckland stands to lose by sending the freight business out of town; secondly, what it might gain by having a new port conveniently nearby; thirdly, how a cruise sector perhaps treble the size it is now can be accommodated.

Down at ground level, the planning report touches on bus routes, pedestrian & cycle-friendly access between the city waterfront & Wynyard Quarter, and pedestrian boulevarding the city-centre few blocks of Quay St (though it’s not spelled out quite so plainly).

But for all the focus on improving public transport access, the report suggestions emanating from Auckland Transport would have isthmus bus commuters at the bottom of town walking about 3 blocks further than they do now to reach their stop. Without too much cover from the elements.

The whole committee series of workshops has been conducted behind closed doors, and there is no apparent reason for that, other than the belief that participants in a discussion should be free to speak their minds without the rest of the world hearing, without statements being taken out of context, and – most importantly, but usually knocked back to least important – without the public being taken on the discussion journey until something concrete is laid out.

What is mapped out is the use of the public realm – affecting many private interests – and if discussion is public there’s a good chance somebody outside the forum will add an idea that hadn’t been thought of.

Despite the freedom of all that private discussion, the answer to the crucial financial questions is not in the agenda. If the council runs to form, it will skirt the question and the uncertainty will remain.

The report’s authors were Senior Panuku project planning leader Joanna Smith, Panuku & Ateed cruise project manager John Smith and Auckland Transport city centre & rapid transport network initiatives manager Daniel Newcombe.

Plan changes on the way

Also on the agenda for the planning committee’s meeting on Tuesday are a number of plan changes for the Auranga development at Drury, from Fletcher Residential Ltd at 3 Kings, for Whenuapai and to correct technical errors & anomalies in the unitary plan, which is now largely operative.

Links:
Planning committee agenda, Tuesday 5 September (9.30am, Town Hall)
9, City centre & waterfront planning refresh
11, Auckland unitary plan (operative in part) – private plan change request from Karaka & Drury Ltd – Auranga B1
12, Auckland unitary plan (operative in part) – private plan change request by Fletcher Residential Ltd – Three Kings 
13, Auckland unitary plan (operative in part) – proposed plan change – Whenuapai 
14, Auckland unitary plan (operative in part) – proposed plan change – administrative plan changeto correct technical errors & anomalies

Attribution: Council committee agenda, mayoral release.

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Goodman-GIC joint venture settles Bayleys House purchase

The joint venture between the NZX-listed Goodman Property Trust & Singapore sovereign wealth fund GIC Pte Ltd has settled its $62.3 million purchase of Bayleys House in the Wynyard Quarter.

The deal was announced on 12 May.

The acquisition of Bayleys House and the $86.2 million purchase of the neighbouring Datacom Building, which settled in May, take joint venture company Wynyard Precinct Holdings Ltd’s portfolio to 7 buildings worth over $470 million.

The 6-storey 8106m² Bayleys House backs on to the Fonterra Centre, also in the portfolio. Fonterra at 109 Fanshawe St, and Bayleys at 30 Gaunt St, also front Halsey St in the VXV Precinct which has been developed by ASX-listed Goodman Group on leasehold land owned by Viaduct Harbour Holdings Ltd.

The 7-storey 16,735m² Datacom building is across VXV Plaza from Bayleys, on the corner of Gaunt & Daldy Sts.

Predominantly leased to real estate specialist Bayleys, technology provider IBM & law firm Mayne Wetherell, Bayleys House’s leases incorporate fixed review structures and have a weighted average term of 9 years. The ground-lease obligations are structured for a period of 15 years.

Goodman Group undertook the development on a build-to-lease basis. The purchase price reflects an initial yield of 7.6% on contract rentals, and additional fitout rent increases the passing yield to 8.8%.

Earlier story:
14 May 2017: Goodman-GIC joint venture adds Bayleys House to portfolio

Attribution: Company release.

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3 apartments sell at Ray White auction

3 of the 5 apartments auctioned at Ray White City Apartments today were sold under the hammer. One was a penthouse on Anzac Avenue (pictured), another was a leasehold unit in Lighter Quay and the third was one of 2 studios in the Bankside Apartments at the top of Shortland St.

CBD

Learning Quarter

Avenue 105, 105 Anzac Avenue, unit 4C:
Features: 97m², penthouse-level 2 bedrooms, 2 bathrooms, secure covered parking space
Outgoings: rates $1988/year including gst; body corp levy $6442/year
Income assessment: $600/week unfurnished, fixed until November, appraisal $700-750/week furnished
Outcome: sold for $705,000
Agents: Mitch Agnew & Ryan Bridgman

Bankside Apartments, 8 Bankside St, unit 7D:
Features: 30m² studio with partitioned bedroom, balcony
Outgoings: rates $1075/year including gst; body corp levy $4665/year
Income assessment: $450/week
Outcome: sold for $315,000
Agent: Ann Bennett

Bankside Apartments, 8 Bankside St, unit 6D:
Features: 30m² studio with partitioned bedroom, balcony
Outgoings: rates $1075/year including gst; body corp levy $4469/year
Income assessment: $450/week
Outcome: passed in at $285,000
Agent: Ann Bennett

The Quadrant, 10 Waterloo Quadrant, unit 1918:
Features: 32m², furnished one bedroom
Outgoings: rates $1211/year including gst; body corp levy $4013/year
Income assessment: out of hotel pool, $430-460/week furnished
Outcome: passed in at $380,000
Agents: May Ma & Mark Li

Wynyard Quarter

Lighter Quay, 75 Halsey St, unit 303:
Features: leasehold 45m², furnished one bedroom, secure parking space
Outgoings: rates $1481/year including gst; body corp levy $6712/year including $3254/year ground rent
Income assessment: $550/week
Outcome: sold for $202,000
Agent: Liz McCarthy

Attribution: Auction.

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Goodman-GIC joint venture adds Bayleys House to portfolio

The joint venture between the NZX-listed Goodman Property Trust & Singapore sovereign wealth fund GIC Pte Ltd has added Bayleys House in the Wynyard Quarter to its portfolio.

That acquisition for $62.3 million, and the $86.2 million purchase of the neighbouring Datacom Building, which settled on Friday, take joint venture company Wynyard Precinct Holdings Ltd’s portfolio to 7 buildings worth over $470 million.

The recently completed 6-storey 8106m² Bayleys House backs on to the Fonterra Centre, also in the portfolio. Fonterra at 109 Fanshawe St, and Bayleys at 30 Gaunt St, also front Halsey St in the VXV Precinct which has been developed by ASX-listed Goodman Group on leasehold land owned by Viaduct Harbour Holdings Ltd.

The 7-storey 16,735m² Datacom building is across VXV Plaza from Bayleys, on the corner of Gaunt & Daldy Sts.

John Dakin, chief executive of the Goodman trust’s manager, Goodman (NZ) Ltd, said the partnership strategy provided scale for the trust and gave it greater exposure to Auckland’s fastest-growing commercial precinct.

“Featuring large flexible floorplates and incorporating sustainable architectural elements & energy-efficient building systems, the lowrise office property is designed to a 5 green star rating. It is also expected to achieve a 5-star NabersNZ base building rating when assessed in 12 months’ time.”

Predominantly leased to real estate specialist Bayleys, technology provider IBM & law firm Mayne Wetherell, Bayleys House’s leases incorporate fixed review structures and have a weighted average term of 9 years. The ground-lease obligations are structured for a period of 15 years.

Goodman Group undertook the development on a build-to-lease basis. The purchase price reflects an initial yield of 7.6% on contract rentals, and additional fitout rent increases the passing yield to 8.8%.

The acquisition, which remains conditional on the approval of the landowner, is expected to settle in June.

On settlement, the joint venture’s portfolio will contain 88,000m² of office space for about 20 tenants. When future lease commitments are incorporated, the portfolio will have an occupancy rate of 96% and a weighted average lease term of over 9 years.

Earlier stories:
27 March 2015: Fletcher & Goodman sign up for new Wynyard Quarter building
7 November 2014: Goodman Group buys another Wynyard development block

Attribution: Company release.

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Panuku to move to former IBM space on Wyndham St

Argosy Property Ltd has reached an agreement to lease 2657m² on the ground & first floors of the former IBM building at 82 Wyndham St in central Auckland to Auckland Council’s property arm, Panuku Development Auckland, which has been based at Westhaven.

The 9-year lease term will start in August and has a break clause (with penalty) at 6 years.

Long-term tenant Boffa Miskell occupies the top floor on a recently renewed lease, leaving one 1575m² floor still available. Argosy chief executive Peter Mence said yesterday the company had had good inquiry from marketing of the remaining floor, which will be available for occupation in 2018.

Argosy is completing an extensive $9 million refurbishment of the entire Wyndham St building to a minimum 4 green star built rating and is targeting a 4 star Nabers NZ energy efficiency rating.

Following the upgrade, Mr Mence said the building would provide very efficient, cost-effective space and an attractive working environment for tenants: “New services will include facilities to encourage cycling to work, an increase in the building’s fresh air supply, a smart lighting system linked to automatic blinds, a window film that improves solar conversion, a variable refrigerant flow air-conditioning system and the latest water-saving & metering systems to enable usage to be measured for Nabers NZ.

Panuku chief executive Roger MacDonald said one objective of the move was to be closer to the Auckland Council headquarters on Albert St: “Currently the Panuku offices at Pier 21 on Westhaven Drive are about 25 minutes away by foot.”

He said Panuku would make a number of long-term savings from moving into a refurbished building.

IBM has moved to 2 floors in the new Bayleys House at 30 Gaunt St in the Wynyard Quarter, behind Fonterra Group Ltd’s Fanshawe St premises and a block from the GridAKL innovation hub.

The Fonterra & Bayleys buildings are in the Wynyard Precinct Holdings Ltd portfolio held by a joint venture between the Goodman Property Trust & Singapore sovereign wealth fund GIC.

Attribution: Argosy & Panuku releases, Goodman website.

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Precinct lifts profit and advances office strategy

NZX-listed property investor Precinct Properties NZ Ltd – now in development mode as it builds & enhances its own sites – lifted net profit after tax by 12.4% in the December half-year.

It reported quick progress from 3 development precincts – Commercial Bay in downtown Auckland, the nearby Wynyard Quarter and, in Wellington, a start on Bowen Campus.

The company announced the leasing of 2700m² on 2 floors in the new PWC Tower at Commercial Bay to law firm DLA Piper, which wants to create new-style workspaces there.

Precinct added to that vibe by announcing it had taken a 50% interest in Generator, which operates 3000m² of co-working space at 3 sites at Britomart.

Image above, October 2016: Looking through Commercial Bay, Precinct Properties’ redevelopment of the Downtown Shopping Centre site (the remains of the building at right, now demolished and with earthworks started for the rail tunnels into Britomart Station); the view from the current PWC Tower across Commercial Bay to the old central post office at Britomart, through the station and on to EY & Westpac’s offices.

Half-year performance summary:

  • Net profit after tax increased by 12.4% to $39.1 million ($34.8 million in 2015)
  • Net operating income increased by 8.7% to $38.8 million (35.7 million)
  • Half-year dividend of 2.8c/share (2.7c/share), representing a 3.7% year-on-year increase
  • Earnings & dividend guidance for the 2017 financial year unchanged at 6.2c/share for earnings and 5.6c/share for dividen
  • Strong financial position with loan:value ratio 20.1% (14.4% at 30 June 2016).

Development progress

Wynyard Quarter:

  • Stage 1 100% leased, 8 months ahead of completion. The $35.9 million Mason Brothers building was the first project to be completed in December and represents a major milestone for the business.

Commercial Bay:

Commercial Bay is the name Precinct has given to the former Downtown Shopping Centre site that ran from Lower Queen St across to Albert St, and the length of that block on Customs St West through to Quay St on the city waterfront.

It also now incorporates the former Queen Elizabeth Square that sat between 2 Precinct-owned buildings along Lower Queen St, HSBC House fronting Quay St and Zurich House on Customs St.

Earthworks are underway for the 39-floor tower on the corner of Customs St West & Albert St and for the city rail link tunnels that will run into Britomart beneath the commercial structures, and accountancy firm PricewaterhouseCoopers has taken naming rights on the tower. PWC has had naming rights on the tower across Albert St & fronting Quay St, also owned by Precinct, since it opened in 2003.

Excavation, retaining & piling are expected to be largely complete by the middle of 2017.

  • Global law firm DLA Piper has committed to 2 floors in the new PwC Tower, taking preleasing by income at the new tower to 64% (from 52% at December 2015) on a weight average lease term of 13.3 years. This commitment takes the amount of space secured outside the portfolio to 8000m² or about a third of committed leases
  • The agreement to acquire Queen Elizabeth Square on Lower Queen St from Auckland Council became unconditional in December and all resource consents were obtained.

Portfolio-wide:

  • Preleasing across all of Precinct’s office developments is now 77%
    99% portfolio occupancy and strong weighted lease term
  • Leasing over the period has been strong, particularly in Wellington, with overall occupancy rising to 99% (98% at 30 June 2016)
  • Weighted average lease term across the portfolio is 5.9 years (6.3 years at 30 June 2016), increasing to 8.1 years after including developments
  • Following the Kaikoura earthquake, a $12 million devaluation has been booked at Deloitte House in Wellington, based on provisional repair estimates.

Enhancing the strategy

Precinct chief executive Scott Pritchard said the increase in net profit was mainly attributable to lower interest & tax expense and a fair value gain in financial instruments. Net operating income, which adjusts for a number of non-cash items, increased 8.7% ($3.1 million) to $38.8 million ($35.7 million at December 2015) or 3.2c/share.

But the performance goes well beyond immediate income: “We achieved a number of milestones across our business and have significantly advanced our long-term strategy.

“We committed to & commenced works at Bowen Campus in Wellington, progressed works at Commercial Bay, including the demolition of the old shopping centre, enjoyed leasing success at Commercial Bay and completed the Mason Brothers building at Wynyard Quarter stage 1.

“The completion of the Mason Brothers building is a major milestone for the business as it is the first project to be completed and sees Precinct begin to transform its portfolio.”

Looking through again, November 2016: This view shows the nose of a cruise ship poking through between 2 Precinct buildings, the HSBC tower at 1 Queen St and Zurich House at 21 Queen St. In the foreground, works have started for the rail tunnels into Britomart from Aotea Station & Albert St, and for the Commercial Bay redevelopment.

At Commercial Bay, DLA Piper’s commitment to 2700m² was a signing from outside Precinct’s existing portfolio, which Mr Pritchard said illustrated the attraction of this cbd waterfront precinct.

The agreement to acquire Queen Elizabeth Square from Auckland Council became unconditional in December. The land is now formally incorporated into the Commercial Bay retail development due to open in late 2018: “This provides certainty to allow the retail leasing programme to advance responding to significant interest from retailers.”

Mr Pritchard said the conditional acquisition of a 50% interest in Generator aligned well with Precinct’s values & its strategy of being a city centre specialist: “It has a strong management team and offers the opportunity to enhance the amenity & service levels that Precinct can offer its clients. It will also enable Precinct to expand its traditional client base with smaller businesses, helping to grow occupancy & demand.”

Interim results                                                                                         

Net property income reduced to $45.9 million ($53.7 million). M Pritchard said: “After adjusting for recent asset sales & foregone income associated with our development projects, like-for-like income was $0.7 million lower than the comparative period. This reduction was a result of the 14 November Kaikoura earthquake. After allowing for the rental abatement at Deloitte House and earthquake-related costs, like-for-like income was slightly higher than the comparative period.

“Precinct’s Wellington portfolio performed very well during the earthquake, with all but Deloitte House being assessed by engineers & reopened within 48 hours.

“Precinct’s structural engineers, Holmes Consulting, were instructed to undertake a detailed structural investigation of Deloitte House, which concluded relatively minor structural damage had occurred. Notwithstanding this, further detailed assessments have identified that the seismic strength of the building is lower than previous assessments.”

Mr Pritchard said an internal review of the 30 June 2016 property valuations indicated no material value movement in the period for all the assets, apart from Deloitte House. The provisional estimated cost associated with remediating the damage and making seismic improvements resulted in the independent valuation of Deloitte House falling by $12.1 million to $33.4 million ($45 million at June 2016).
The value of net tangible assets/share at interim balance date was unchanged from June at $1.17 (June 2016: $1.17).

Link:
Precinct 2017 interim report

Related stories:
17 February 2017: Precinct buys into co-workspace specialist Generator
DLA Piper signs for Commercial Bay
21 December 2016: Precinct’s QE Square purchase unconditional

Attribution: Company release.

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Caltex site on Fanshawe St sells

A Fanshawe St site which Z Energy Ltd said was too valuable to be a petrol station has, indeed, been sold for over 4 times its valuation as a Caltex service station.

The site was among 10 former Caltex outlets with retailers installed on short-term contracts when Z Energy took over Chevron NZ Ltd’s Caltex & Challenge brands, and is the first of the 10 to have its future decided.

Z Energy got a valuation of $5 million on it as a service station and has sold it through a Colliers tender for $23.274 million.

The pumps, across the road from Victoria Park on the edge of the Wynyard Quarter, closed at the start of August. New office developments are rising on 2 sides of it.

Sales

CBD

Wynyard Quarter

155-167 Fanshawe St:
Features: 3879m², former Caltex service station site
Outcome: sold for $23.274 million
Agents: Colliers capital markets team

Leases:

CBD

Queen St

260 Queen St:
Features: 90m², commercial premises, leased to Love My Makeup Ltd by McDonalds Restaurants Ltd
Rent: $235,000/year gross + gst
Agent: Nilesh Patel

Isthmus east

Mt Wellington

5 Tiri Place:
Features: 1160m² industrial property, lessor Tiri Partnership Ltd, lessee SKU Ltd, lease term including renewals 6 months
Rent: $52,200
Agents: Ben Herlihy, Dwayne Warby & Todd Kuzmich

North-east

Albany

6 Tawa Drive:
Features: 2095m² industrial premises leased to Auckland City Couriers Ltd – warehouse 1133.7m², mezzanine 550m², office 412m², hardstand container loading area
Rent: $232,000/year
Agents: Ryan de Zwart, Matt Prentice & Hamish West

Silverdale

18A & B David McCathie Place:
Features: 2199m² office & warehouse, leased to Masons Plastabricks Ltd
Rent: $222,500/year
Agents: Ryan de Zwart, Matt Prentice & Shoneet Chand

South

East Tamaki

331B East Tamaki Rd:
Features: 840m² industrial property, lessor GLT Properties Ltd, lessee Nexus Foams Ltd, lease term 3 years, 3 3-year rights of renewal
Rent: $13,333.33 net
Agents: Jolyon Thomson, Hamish West & Paul Higgins

Earlier story:
31 August 2016: Fanshawe St site ‘too valuable for a petrol station’

Attribution: Agency release.

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