Precinct Properties New Zealand [NZX: PCT], the country's third-biggest listed property investor by market value, expects to recognise a 5.5 percent gain in its portfolio's value as Auckland real estate prices continue to climb.
A revaluation gain in its property portfolio of some $47 million is expected in the year ended June 30, boosting its portfolio to $1.73 billion, from $1.64 billion the previous year, the Auckland-based landlord said in a statement. Auckland valuations have climbed 5.9 percent while Wellington has slipped 1.4 percent.
"The Auckland increases were mainly attributable to an increase in market rents, leasing success and increased positive sentiment due to a continued firming investment market," Precinct said in a statement. "The main contributors to the Wellington decreases were the uncertainty associated with the government's future accommodation plans and a softening of gross market rentals, which was partly offset by insurance cost savings."
Auckland's rising valuations haven't translated into increased rents, and the company said its portfolio weighted average, by income, capitalisation rate fell to 7.3 percent from 7.5 percent.
The company will report full-year earnings to the market on Aug. 13. In February it said net profit rose 67 percent to $39.5 million in the six months ended Dec. 31, as net property income in Auckland surged almost 19 percent to $18.2 million in the first half, while income from Wellington properties edged up just 0.4 percent to $25.2 million.
Precinct shares rose 0.9 percent to $1.085 and have advanced 9.6 percent this year, outperforming the NZX 50 Index's 8.3 percent gain. The stock is rated an average of 'hold' according to six analysts survey by Reuters, with a median price target of $1.05.