Listed commercial property investor Precinct Properties New Zealand is confident of the future having lifted annual profit 17 per cent.
The company’s net profit rose to $162.1 million in the 12 months ended June 30, from $138.2 million a year earlier.
“Demand for city centre office space remains strong,” says Precinct Properties Chief Executive Scott Pritchard.
“With limited supply available and overall vacancy rates at record lows, we expect this strong demand for office space to continue and be further driven by continuing employment growth in the coming years.”
Precinct noted the November 2016 Kaikoura earthquake had a significant impact on the Wellington market.
It also revealed structural issues at Deloitte House, resulting in a $26.1 million value write-down.
The earthquake also reduced Precinct’s earnings per share through lost income and seismic repair costs.
Despite this, it recorded an overall valuation gain of $77.5 million, helping lift the value of the portfolio to $2.04 billion.
“We achieved strong progress across all our activities last year,” Pritchard says. “We saw continued gains from executing on a strategy of specialising in our city centres.”
The company’s occupancy increased to 100 per cent at year-end versus 98 per cent in 2016, while the weighted average lease term was 8.7 years.
Work has commenced at Wellington’s Bowen Campus and Commercial Bay in Auckland remains on track for overall completion by mid-2019. Precinct recorded a revaluation uplift on both development sites.
Forecast development profit from both Bowen Campus and Commercial Bay has increased to around $242 million, of which approximately $160 million remains to be recognised in future years.
Forecast development profit is calculated as independently assessed as if complete value less forecast total project cost.