An artist’s impression of Precinct’s proposed Downtown tower, across the harbour from Bayswater.

Elation at Downtown rail, tower & square deal

Auckland mayor Len Brown and Precinct Properties NZ Ltd chief executive Scott Pritchard were elated yesterday: the city will get an early start to its rail tunnel linking Britomart round to Mt Eden, and Precinct can develop a new near-waterfront tower on schedule.

The conditional development agreement they announced yesterday also involves land transfers, especially the controversial trade of Queen Elizabeth II Square at the foot of Queen St, along with payment to Precinct for providing a laneway cutting east-west across the site and for the extra cost of building the tower above the rail tunnel.

The mayor said (at a hastily called briefing which I didn’t make): “It will lead to an exciting transformation of the public spaces around the Britomart train station area, and it’s an example of how a partnership with the private sector can deliver economic transformation & more jobs in Auckland.

The proposed Downtown tower, seen from Princes Wharf.

The proposed Downtown tower, seen from Princes Wharf.

“The Downtown development project will help create job, giving the potential for 12,000 more people to be working close to public transport at Britomart. It is also the key to a number of projects that will kick off the creation of a world-class downtown area, including improvements to public space, transport facilities & urban design.”

Mr Pritchard said in Precinct’s release on its interim result: “Around 18 months ago we set out to create a world-class retail & office development that will bring new life to the heart of Auckland’s waterfront. We believe the concept that has been created for the Downtown development project meets this ambition.

“The office tower is world-class, but designed with Auckland & New Zealand in mind. The curved design references the Waitemata Harbour, while the retail design is a network of laneways which provide significant public space for Aucklanders & its visitors.

“The retail environment (on 3 levels) will provide for food & beverage, retail & elevated outdoor public spaces.”

Under the agreement announced yesterday, the council will sell the 1900m² square to Precinct for $27.2 million, conditional on rezoning. The council agreed to a sale last September.

The council will pay Precinct $9 million for the through-site east-west link between Queen & Albert Sts, and compensation for tunnels volume, and another $10.7 million for the extra construction costs above the tunnels.

Precinct’s rights over 200 parking spaces in the council’s Downtown parking building have been extended to 2095, terminable for redevelopment after 2048.

Construction of the downtown section of the city rail link – at the moment a council-only project because the Government hasn’t signed up for it – would go to tender in time for enabling works to start mid-year and completion by 2019.

The 28-storey tower will rise above 3 levels of retail plus basement parking.

Precinct ebit up but npat down

Precinct also announced its half-year result yesterday – net operating income up $3.3 million to $35.3 million (up from 3.1c to 3.33c/share), but net profit after tax down $9.9 million to $31.6 million. The company went from an unrealised interest rate swaps gain of $10.6 million in 2013 to a loss of $5.3 million for the latest period, and from a deferred tax expense of $3.1 million to a benefit of $1.4 million.

Precinct 1:7 rights issue

Precinct Properties also announced this morning that it would raise $174.1 million through a 1:7 accelerated entitlement offer at $1.15/new share. The offer will be underwritten (excluding management company Haumi Co Ltd’s share).

The institutional offer will be held over the next 2 days, with settlement & allotment on Wednesday 4 March. The retail offer to eligible shareholders will open on Monday 2 March and close on Wednesday 18 March.

Attribution: Company & mayoral releases.

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