Precinct Properties NZ Ltd’s net operating income was steady in the December half, but the bottom line shrank by 55% after a reassessment of fair value on its Brandon St property in Wellington.
The company said the fall in the New Zealand interest rate swap curve during the period was the primary reason for the fair value loss in financial instruments of $6.9 million. This loss compared with a $15.3 million gain for the same period last year.
The NZX-listed company’s biggest project, Commercial Bay on the downtown block between Queen & Albert Sts in Auckland, now has 60% of its retail space committed, 66% of space in the office tower, and negotiations underway on another 15% of the tower.
While Commercial Bay’s construction continues, Precinct has put a 50% stake in the ANZ Centre, further up Albert St, on the market.
- Pretax net operating income up 3.8% to $40.9 million ($39.4 million in the December 2016 half), driven by 3.7% lift in net property income
- Net operating income steady at $38.2 million ($38.8 million)
- Net profit after tax down 55% to $17.7 million ($39.1 million) following fair value movement for 10 Brandon St in Wellington
- Earnings guidance for the 2018 financial year unchanged at 6.3c/share, dividend guidance maintained at 5.8c/share
- Gearing 23% (25.1% at 30 June 2017)
- Occupancy of 99% (100% at 30 June 2017) and a weighted average lease term across the portfolio of 8.8 years (8.7 years at 30 June)
- 19 leasing transactions totalling 8170m²
- like-for-like rental growth of 12.4% in Wellington corporate assets and 3.1% across the portfolio
- Post-balance date, Precinct has begun a marketing campaign to divest a 50% interest in the ANZ Centre, Auckland.
Development update – Commercial Bay:
- Project remains on budget with yield on cost maintained at 7.5%, supported by strong leasing outcomes
- Increased leasing of retail space with commitments of 60% (30 June 2017: 46%).
- Total tower office commitments maintained at 66%, another 15% (6000m²) under negotiation
- Advancing the second stage of Commercial Bay with the integration & redevelopment of 1 Queen St into a mixed hotel/office use. Negotiations with a preferred hotel operator are advanced and commitment to this project is targeted for later this year.
Bowen Campus stage 2, in Wellington: Design continues and site preparation works are underway.
Attribution: Company release.