Precinct Properties takes a seismic hit
NZX-listed Precinct Properties' Deloitte House in Wellington has been devalued by about a quarter after the November earthquake but the company posted an overall increase in profit.
Precinct said its structural engineer, Holmes Consulting, initially investigated the highrise at 10 Brandon St and concluded there was relatively minor damage.
But further assessments found the seismic strength of the building was lower than previously thought.
A review of the cost of fixing the damage and seismic strengthening resulted in the independent valuation of Deloitte House falling by $12.1 million to $33.4m.
Precinct had placed the 16-storey building on the market in October 2016 just before the earthquakes struck. It was purchased by Precinct in 2007 for $56.75m.
The building remains closed and tenants including Deloitte are working from several other premises. About 1000 staff from several tenancies were displaced.
Otherwise, the Wellington portfolio stood up well, Precinct chief executive officer Scott Pritchard.
Leasing had been strong, particularly in Wellington with occupancy across all Precinct's properties rising to 99 per cent mainly the result of new leases in 157 Lambton Quay and HSBC House.
Works at the Bowen Campus renovation project in Wellington began in November with the phase including demolition of fixtures and fittings and removal of the original facade.
Earthquake-related costs including a rental rebate for Deloitte House reduced Precinct's net property income from all its buildings in Wellington and Auckland to $45.9m for the six months ending December 2016, which compares with $53.7m for the six months ending December 2015.
In Auckland the company focused on its Wynyard Quarter initial stage where the $35.9m Mason Brothers Building was the first project to be completed in December, leased to Warren and Mahoney, Auckland Tourism, Events and Economic Development, and Mott McDonald on a weighted average lease term of 8.4 years.
The Innovation Building is expected to be completed in July.
Following commitment by DLA Piper, the company's new PWC Tower in central Auckland is 64 per cent leased "by income".
Precinct also completed the unconditional acquisition of Queen Elizabeth Square from Auckland Council for a new retail centre.
Demolition of the old Downtown Shopping Centre and construction of retail space is expected to be largely complete by the middle of this year.
Pritchard also announced the conditional acquisition of a half-share in co-working operator Generator.
Net profit after tax increased by 12.4 per cent to $39.1m, providing for a 3.7 per cent lift in dividend.
The weighted average lease term across the portfolio is 5.9 years.
Precinct shareholders will receive a second-quarter dividend of 1.4 cents a share plus imputation credits of 0.1855 cents a share.