Precinct Properties NZ Ltd has pushed back the opening dates for its Commercial Bay property in downtown Auckland to March 2020 for the retail centre and April 2020 for the new PwC Tower.
Chief executive Scott Pritchard said today: “Due to this revision the forecasted total project cost is now expected to be between $690-700 million, with the potential increase of up to $10 million reflecting the cost of delays to opening.
“The yield on cost is expected to remain largely unchanged in a range of 7.4-7.5%, ensuring that the development remains on track to deliver the expected benefits to Precinct’s long-term earnings.”
When Precinct announced in December 2015 it was proceeding with the project, it had a $681 million price tag, retail opening by October 2018 and the office tower completed in mid-2019.
Mr Pritchard said today Precinct’s project manager, RCP Ltd, completed the programme review independently of the main contractor, The Fletcher Construction Co Ltd.
Mr Pritchard said Fletcher had brought a number of claims against Precinct under the construction contract seeking extensions of time &/or additional cost, and it anticipated receiving further claims: “To date, these claims have not resulted in material additional costs or extensions of time being awarded and Precinct remains confident that the provisions of the construction contract appropriately protect Precinct from losses due to contractor delay &/or breach of contractor obligations.
“Liquidated damages are expected to largely mitigate the impact on Precinct from losses of income & other prolongation costs over the delayed period. However, liquidated damages will cease to apply following completion of base build works.”
Fletcher Building Ltd, the construction company’s parent, said in a response today it remained within the construction provisions announced in February 2018.
“As Precinct Properties has acknowledged today, Fletcher Construction has brought a number of claims, and further claims are anticipated. We are unable to give further details as we are bound by confidentiality clauses in our contract. We remain confident in our programme.”
Mr Pritchard said in his release: “The revised targeted opening dates are due to observed delays in construction progress by the main contractor, across both the Tower & retail centre components.
“Due to this revision, the forecasted total project cost is now expected to be between $690-700 million, with the potential increase of up to $10 million reflecting the cost of delays to opening.
Pleasingly, retail leasing commitment has increased to above 92%, and office leasing continues to advance, with further leasing beyond the currently committed 80% progressing well.
“As previously stated, the last 2 months have been critical in progressing the project, and it is unfortunate to have to confirm that we have observed further slippage beyond what we observed earlier this year.
“We will continue to work closely with all retailers & office occupiers at Commercial Bay to manage risks and minimise any potential disruptions that the revised opening dates may cause. Our key priority is ensuring that all retailers can plan their opening at Commercial Bay with confidence, and that our office occupiers can effectively transition to their new premises”.
Mr Pritchard said the revised opening date for the retail centre took account of expert advice that the base building works were unlikely to be complete before this December. “In addition, Precinct has decided to provide additional time for completion of retail fitout works after these base building works have been completed.
“This decision has been made to ensure retailers have the best possible opportunity to open successfully, as well as ensuring that the quality of the finished centre meets our aspirations. Consequently, the retail opening date will be in March 2020, about 3 months after estimated completion of base build works.”
14 December 2015: Precinct all set to transform Downtown
Attribution: Precinct & Fletcher releases.