New plans for Auckland shopping centre

01:53, Sep 21 2012

AMP NZ Office is spending $90 million buying a downtown Auckland shopping centre from Westfield which it believes is the ''best site in town'' for future development.

The NZX-listed company, which owns more than $1 billion of grade A office space in Auckland and Wellington, has reached an agreement to buy the Westfield Downtown Shopping Centre on Auckland's waterfront.

Currently a four level, 14,000 square metre shopping centre, the site, approximately 6500 square metres, has an existing resource consent for a 71,000 square metre mixed-use office and retail development.

Chief executive Scott Pritchard said the site would not likely be developed for years but gave the company ample opportunity.

''This site... [gives] us the ability to acquire something that has long term development potential but provides us with a holding return,'' Pritchard said.

''We get to choose when is the most optimal time to develop it which in the land of developing buildings, time is often the one thing that can hurt you.''

If the Auckland Council is able to proceed with its plans to build a rail loop it will need to use the site to develop it, and Pritchard said that factor was likely to determine future development plans.

"We support Auckland Council's call in the city centre masterplan for this precinct to showcase Auckland, and we are keen for this site, along with our adjacent buildings, to contribute to that vision."
There was currently ''no demand'' for a new office tower in downtown Auckland but the company had options for future development.

''We don't think there will be for some time because a lot of the major occupiers in the market have got reasonably long term leases so this is very much a long term opportunity for us and ensure that when demand is there we have what we think is probably the best site in town to try to meet that demand.''

In the short term, the company had the opportunity to improve links with other buildings it owned adjoining Westfield, PwC Tower, Zurich House and AMP Centre.

ANZO said the purchase price is below independent valuation and reflected an initial yield of 7.6 per cent. The centre has a weighted average lease term of 2.9 years, is 4.3 per cent under rented and is in a high demand growth location.

Pritchard also said the company would change its name to Precinct Properties New Zealand from next Friday, a move which ''reflects its evolution over 15 years to become New Zealand's only specialist listed owner of premium central city office space''.

The latest purchase was likened to the purchase of Bowen Campus in Wellington, situated immediately behind Parliament, which is nearby other major building AMP Office has on The Terrace. That site also has an existing resource consent for a major expansion.