Precinct lifts 1H profit on strong occupancy rate
Listed commercial property investor Precinct Properties lifted first-half profit 12% as its overall occupancy rate rose to 99% and demand for its Commercial Bay development remained strong.
Net profit rose to $39.1 million, or 3.2c a share, in the six months ended December, from $34.8 million, or 2.95c a year earlier, the company says.
Precinct has signed global law firm DLA Piper to a lease in its new Commerical Bay PwC Tower in downtown Auckland as part of the legal company’s plans to redesign the traditional legal workspace.
DLA Piper will lease two 2700sq m across two floors in the 39-level premium development planned and says will create a state-of-the-art, open plan workplace.
The new design will include impressive spaces in which to entertain clients, network and hold training, the company says.
The new lease takes Precinct’s pre-leasing of the new tower to 64% based on income from 52 % in December. The $681 million development will include the 39-storey office tower and retail centre.
Precinct has now unconditionally acquired Elizabeth Square at the front of the development site from Auckland Council after winning and Environment Court appeal against the development by several civic groups.
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% to $39.1 million.
It maintained its earnings guidance of 6.2c a share over the year, and annual dividend guidance for 5.6c, declaring a 2.8c interim dividend with a March 2 record date, payable on March 16.
Overall portfolio occupancy rose to 99% in the first half from 98% 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% of Generator, which operates 3000sq m 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 says.
Generator was established in 2011 and operates over three sites within the Auckland CBD. Its membership includes 107 companies, including award-winning local start-ups and beachhead offices for global operators.
Generator founder and chief executive Ryan Wilson says the company is at the forefront of the global movement of co-working that has seen dramatic global growth and significant CBD property market disruption in recent years.
Co-working worldwide is predicted to number more than 26,000 operators and 3.8m members by 2020 – a staggering 41% compound growth since 2016.
Precinct 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% in the past 12 months.