Quake-weakened Wellington tower selling for a fifth of earlier price

Monday, 23 April 2018

The former Deloitte House, 10 Brandon St Wellington.

Stock Exchange-listed Precinct Properties has clinched an agreement to sell the former earthquake-damaged Deloitte House at 10 Brandon St, Wellington, for $10.2 million.

Over the past 15 months the property has been revalued down in Precinct's books to $7m - a fraction of the $56m purchase price paid by the company in 2007.

Scott Pritchard is the chief executive of Precinct Properties.

'With several options for 10 Brandon Street having been assessed to date, we believe the sale of this asset represents the best option for Precinct,' chief executive Scott Pritchard said in a statement.

Precinct was unable to claim insurance because none of the damage was above the excess level under the insurance policy.

Ex-Deloitte House when it was advertised for sale in 2016 by owner Precinct Properties.

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The building had relatively little earthquake damage but several subsequent investigations revealed structural weakness and a soaring cost of repairs.

Precinct was close to selling the high rise when earthquakes struck the Wellington region in late 2016.

The most recent devaluation also forced a revision of the last six months profit result to the end of 2017 with the company's net profit after tax of $17.7m reduced from $39.1m.

The sale of 10 Brandon Street is conditional on ground lessor approvals and is due to settle in August 2018.

The buyer of the property was Eyal Arahoni who was kept on tenterhooks as the final negotiations took place as the millionaire was about to enjoy a birthday treat flight in a Strikemaster Jet over Wellington.

The broker was Matt St Amand of CBRE who said Arahoni was keen to reposition the building and take advantage of the low office vacancy rate.

Deloitte staff moved out of the building soon after the earthquakes at the end of 2016 and into offices at 20 Customhouse Quay.

Meanwhile, Pritchard also announced the sale of a half-interest in ANZ Centre in Auckland.

Progressing these asset sales will enable Precinct to focus on and recycle capital into its future development opportunities, Pritchard said.

Pritchard said several parties had expressed interest and pricing indications were at a premium to the June 2017 valuation.

Precinct has agreed to a period of exclusivity for one party to complete due diligence and enter into a binding sale and purchase agreement.

But at this stage there was no binding agreement for the sale and purchase of the property.

The building is a recognisable city land-mark and Auckland's third tallest building located across from St Patrick's Square at 23 Albert St, with 39 levels. It recently underwent a $76m refurbishment of the open plan office space and floor to ceiling windows, lobby and external plaza.

'The half share interest in the ANZ Centre has received very strong interest and we look forward to forming a long-term relationship with the preferred bidder,' Pritchard said.

Precinct's share price reached a high point of $1.37 at the end of 2017 but more recently has eased to $.125 a share.