Precinct Property profit slips

Precinct Property has recorded a $117.2 million profit for the year to 30 June on the back of its blue-chip tenants in prime Auckland and Wellington locations.

The net profit after tax was down on Precinct's result last year, when the company posted a $157.5m profit, although that included a $39.7m deferred tax benefit.

Net operating income was $63.8m, up $5.5m on the previous year.

A property revaluation gain of $47.5m contributed the other half of the profit, compared with a revaluation gain of $46.3m the previous year. It brought the company's property portfolio value to $1.73 billion.

The company will pay a full-year dividend of 5.4 cents per share, up from 5.12c per share last year.

Precinct chief executive Scott Pritchard said the last year "had seen continued progress as the business was further positioned to execute on a strategy of improving portfolio quality, increasing its weighting to Auckland and delivering a long-term improved earnings outlook".

The buoyant Auckland CBD market and strong Auckland economy had resulted in vacancy in prime CBD office buildings fall to a 20-year low of just 1.4 per cent in June, well below the long-term average of 8.2 per cent.

The Downtown Shopping Centre development master plan has been completed, with well advanced negotiations for the construction of the city rail link tunnels through the centre for Auckland Transport.

Pritchard said research had shown an increased demand for retail on the 2-hectare waterfront site which would cost between $400m and $500m to develop.

"There is the ability for us to create a podium which knits our five office towers together for our office users, but also for city-centre residents and tourists - the opportunity has become bigger than we first thought.

"The earliest we can commit is March 2016 and at this stage that is what we are working towards."

In Wellington, the company was pleased with its leasing success where occupancy at its 18-storey office tower/car park at 80 The Terrace had increased by about 11 per cent to 89 per cent. Only 1.5 floors remain vacant.

Precinct this year submitted a response to the Government's request for a proposal to house government workers. It involves the Bowen Campus, 1-3 The Terrace, Pastoral House and Mayfair House.

Short-listed parties were expected to be informed of an outcome over the next few months, the company said today.

During the year Precinct completed big seismic upgrade projects including work at 80 The Terrace, the former central police station in Wellington and SAP Tower in Auckland.

Precinct's portfolio of 17 properties includes the PwC Tower, ANZ Centre, and the Downtown Shopping Centre in Auckland, and Bowen House, No 1 The Terrace and Vodafone on the Quay in Wellington.