Precinct lifts 1H profit 12% on strong occupancy rate

Thursday 16 February 2017 09:56 AM

Precinct lifts 1H profit 12% on strong occupancy rate, signs DLA Piper for Commercial Bay

By Sophie Boot

Feb. 16 (BusinessDesk) - Precinct Properties New Zealand, the listed commercial property investor, lifted first-half profit 12 percent as its overall occupancy rate rose to 99 percent and demand for its Commercial Bay development remained strong.

Net profit rose to $39.1 million, or 3.2 cents per share, in the six months ended Dec. 31, from $34.8 million, or 2.95 cents, a year earlier, the Auckland-based company said in a statement.

Net operating income, an alternate performance measure Precinct uses which excludes non-cash items such as unrealised movements in the value of investment properties, rose 12 percent to $39.1 million. It maintained its earnings guidance of 6.2 cents per share over the year, and annual dividend guidance for 5.6 cents, declaring a 2.8 cent interim dividend with a March 2 record date, payable on March 16.

The investor announced law firm DLA Piper has leased 2,700 square metres of its Commercial Bay development in Auckland, taking it to 64 percent pre-leasing based on income, from 52 percent in December. The $681 million development in downtown Auckland will include a 39-storey waterfront office tower and retail centre. The company said interest remains strong and it expects more lease success in 2017 now it has unconditionally acquired Queen Elizabeth Square from Auckland Council.

Overall portfolio occupancy rose to 99 percent in the first half from 98 percent a year earlier, while the weighted average lease term dropped to 5.9 years, from 6.3 years in June 2016.

Precinct will buy 50 percent of Generator, which operates 3,000 square metres of co-working space in Auckland's Britomart. The acquisition will help the company expand its traditional client base into smaller businesses, helping to grow occupancy and demand, it said.

The company booked a $12 million devaluation on Deloitte House in Wellington to $33.4 million following the Kaikoura earthquakes in November. An initial assessment concluded minor structural damage had occurred, but subsequent assessments identified that the seismic strength of the building was lower than previous assessments, Precinct said.

The shares last traded at $1.235, and have gained 6.9 percent in the past 12 months.

(BusinessDesk)

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