Rebound in property values for leading inner city property developer Precinct Properties

Tuesday, 9 February 2021

Scott Pritchard, Precinct Properties chief executive, opened the $1 billion-plus Commercial Bay office and retail development in June last year.

Leading inner city office buildings developer Precinct Properties is enjoying a rebound in the value of its properties.

The company, which develops and owns high-end office developments in Auckland and Wellington’s CBDs, has announced a 5.1 per cent jump in the value of its property portfolio to $3.1 billion.

The value uplift reverses the $66 million fall in its portfolio value at the height of pandemic uncertainty. The decrease in value was announced at its full year result in August 2020. It was mostly due to a decline in the value of its new $1b-plus Commercial Bay office and retail development on Auckland’s waterfront.

The 5.1 per cent rise represents a gain of $149m for the half-year to December 31, 2020.

A depiction of planned new buildings 40 and 44 Bowen Street in Wellington owned by Precinct Properties.

* Precinct Properties keeps its developments rolling with another $100m building in Wellington

* Precinct Properties slashes value of Commercial Bay

The 5.1 per cent gain would increase the value of Precinct’s portfolio to around $3.1 billion, after the sale of its 50 per cent interest in the ANZ Centre, in Auckland, the company said.

Precinct said it was selling its half share in the ANZ Centre for $177m. The price was consistent with a June 2020 independent valuation. The transaction was subject to regulatory approval with settlement expected in April 2021.

The $177m is lower than the $181m paid to Precinct for half of the ANZ Centre by American investor Invesco in 2018.

On a like-for-like basis, Auckland asset valuations increased by around 4 per cent and Wellington assets recorded an uplift of 8 per cent, compared with the draft interim book values, the company said.

Market rental growth in Wellington and development progress at Bowen Campus Stage 2, where Precinct is building a $90m, seven-level earthquake-resilient office building and planning a second, also contributed to the rise in property values.

The revaluation remained subject to the independent auditor’s review and finalisation of the company’s interim results to be announced on February 25.

Proceeds from the ANZ Centre sale would be used to repay bank debt. The sale and lift in valuation would result in its gearing at December 31, 2020 being about 26 per cent.

Precinct’s shares traded up 3 cents to $1.71 this morning. The $1.71 is 10 per cent lower than a year ago.