Precinct sells Wellington building for $36.1 million, affirms 2015 earnings

Tuesday 2nd June 2015

Precinct Properties New Zealand, which raised $174.1 million in March to help fund major developments, sold a Wellington building in the central business district for $36.1 million, just below book value, and has affirmed its earnings forecast for the 2015 financial year.

Auckland based Precinct sold 80 The Terrace, valued at $37.1 million as at Dec. 31, to an unidentified private investor, and will use the proceeds to repay bank debt which will trim its bank gearing ratio to about 18 percent, it said in a statement. As at March 31, Precinct's gearing ratio was at 19.1 percent.

"Following the departure of major occupier Axa in 2013, the building was largely vacant," chief executive Scott Pritchard said. "At that time we committed to upgrade the office levels and the lobby and have since completed 6,000 square metres of new leasing, increasing occupancy from 40 percent in early 2014 to 100 percent now. This has enabled us to achieve the sale outcome announced today."

In February, the company said short term earnings may be hit by efforts to trim debt, but that a higher quality portfolio would deliver strong results over a longer period.

The sale is Precinct's latest bid to shrink its property footprint in Wellington and expand its presence in Auckland, where it sees wider growth opportunities. As at March 31, Precinct's weighting to Auckland was 58 percent by value.

Separately, Precinct affirmed annual earnings guidance of about 6.1 cents per share before performance fees, and an annual dividend payout of 5.4 cents per share.

Precinct's board declared a third-quarter dividend of 1.35 cents per share, plus imputation credits of 0.3754 cents, payable on June 4.

As at March 31, the company's total assets were valued at $1.66 billion, and its portfolio had a 98 percent occupancy rate with a 5.1 year weighted average lease term.

The shares fell 1.3 percent to $1.105, and have declined 5.2 percent this year. The stock is rated an average 'hold', based on six analyst recommendations compiled by Reuters, with a mean target price of $1.15.

BusinessDesk.co.nz

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