Tag Archives | Wynyard Quarter

Precinct secures tenants for Wynyard & 1 Queen St

Precinct Properties NZ Ltd has secured the Media Design School as a tenant in its 10 Madden St development in the Wynyard Quarter, and law firm Bell Gully in the refurbished 1 Queen St, which will be incorporated into the Commercial Bay precinct.

The Media Design School will occupy 4760m² in 10 Madden St on a 15-year lease term. As announced in November, Precinct committed to stage 2 in the Wynyard Quarter on an uncommitted basis. Chief executive Scott Pritchard said yesterday the Media Design School lease took leasing commitment to 60% of the project’s office area.

He added: “The addition of the Media Design School to our Innovation Precinct is significant and demonstrates the momentum that’s underway to create a vital new creative community. We believe Wynyard Quarter will be on a par with leading international innovation precincts and, having secured one of the world’s leading design & digital tertiary institutions, is a huge advance.”

The building, scheduled for completion at the end of 2020, will have a total net lettable area of 8290m². Mr Pritchard said that, once fully leased, the project should generate a yield on cost in excess of 7.0%.

At 1 Queen St, Mr Pritchard said Bell Gully had committed unconditionally to about 3800m² of office space. The law firm has been a tenant of the Vero Centre on Shortland St for 18 years.

Mr Pritchard said the 1 Queen St project was 76% precommitted following the previously announced commitment by InterContinental Hotels Group to 11 levels of the building: “We are delighted to have secured leading law firm Bell Gully at 1 Queen St, 3 years ahead of practical completion. Securing this commitment from outside our existing portfolio is a great result and illustrates the quality of the Commercial Bay precinct.”

Attribution: Precinct release.

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Precinct commits to Wynyard stage 2

Precinct Properties NZ Ltd committed yesterday to stage 2 of its Wynyard Quarter project, part of the wider Innovation Precinct on the Auckland waterfront.

Chief executive Scott Pritchard told the company’s annual meeting yesterday Precinct would develop the second stage, 10 Madden St, on an uncommitted basis. It will comprise a single-level basement & 7 upper levels, providing a net lettable area of 8290m², has an expected total project cost of $72 million and is expected to generate a yield on cost in excess of 7% once fully leased.

In a release out yesterday, Mr Pritchard said: “Committing to the development of stage 2 reflects an important step forward in the development of the wider Innovation Precinct and the creation of a thriving creative hub. We began construction of stage 1 in 2015 and we are excited to proceed with the next stage of the project’s evolution.

10 Madden St’s N Cole Plaza.

“Having developed the Mason Bros building during stage 1 on an uncommitted basis, we have confidence that the quality & location of this development will attract occupiers, with the majority of tenancies expected to be committed prior to completion. We are already seeing good levels of enquiry from businesses wanting to be located in the Innovation Precinct.

“Following stage 2, there are a further 2 sites which offer another 22,000m² of office space, which we expect to develop over the next 5-6 years.”

Sustainability is a leading principle of the Innovation Quarter’s design, and for stage 2 Precinct will be targeting a 5 star green design (office) & as-built star accreditation, and a 4.5 star NabersNZ whole building rating. The building will include end-of-trip facilities, with 12 electric vehicle charging units, and incorporate daylight-harvesting energy-efficient LED lighting. The rear side of the building will also feature a vertically planted green screen which will cover the open egress stairs.

Precinct will undertake the development in partnership with Auckland Council property arm Panuku Development Auckland. Hawkins Construction Ltd will be the main contractor under a fixed-price construction contract. Construction is expected to begin this month, and practical completion is programmed for the end of 2020.

Attribution: Company release, annual meeting.

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Precinct Properties presents a long list of positives from development & in financial structure

Major commercial property owner – and nowadays developer – Precinct Properties NZ Ltd lifted its net profit after tax for the year to June by 57.2% to $254.9 million.

The NZX-listed company’s biggest project at the moment is the $1 billion Commercial Bay development, redeveloping the Downtown Shopping Centre site at the foot of Auckland’s central business district. It’s also developing Bowen Campus in Wellington and has completed developments in Auckland’s Wynyard Quarter.

Image above: The trio of buildings at the centre of Precinct Properties’ strong performance – the existing PwC Tower at right, the new PwC Tower under construction and the existing HSBC House at 1 Queen St, to be redeveloped into a hotel with office above.

Chief executive Scott Pritchard said yesterday Fletcher Building Ltd had provided revised completion dates at Commercial Bay of September 2019 for the retail & December 2019 for the new PwC Tower (across Albert St from the building currently called PwC Tower).

Precinct also announced its plans for 1 Queen St, sitting on the Quay St frontage of the redevelopment, to include a 244-room luxury hotel operated by the InterContinental Hotels Group (IHG) – see separate story.

9% revaluation gain

Mr Pritchard said the quality of Precinct’s portfolio had resulted in a $208.7 million (9%) portfolio revaluation gain to $2.5 billion.

Precinct Properties is the largest city centre real estate owner in New Zealand, and Mr Pritchard said it was committed to its long-term strategy as a city centre specialist.

“The last financial year has delivered another strong result for our business. As we move forward with our strategy, we progressed a number of initiatives and achieved key milestones during the year.

“We have continued to take an active management approach with our investment portfolio & our development pipeline, leveraging Precinct’s market position.”

“The long-term outlook for the Auckland market remains strong, with solid demand drivers for city centre real estate across the office, retail, hotel & residential markets.”

Mr Pritchard said the Wynyard Quarter & Bowen Campus also contributed to this growth, with works progressing well over the last 12 months.

The Precinct Properties precinct: From the ANZ Centre up Albert St, down to the waterfront via Commercial Bay where Precinct is developing the new PwC Tower across the street from the existing PwC Tower, and yesterday announced the redevelopment of 1 Queen St (at right) to contain a hotel with offices on the upper levels.  Other Precinct buildings in this precinct are Zurich House and the AMP Centre.

Commercial Bay update:

Precinct’s reinforced its vision & long-term commitment to the rejuvenation of the central city with the announcement of the $298 million development at 1 Queen St (currently HSBC House), which will include the hotel in the lower half of the building.

Commercial Bay, looking out between the Cloud & Princes Wharf.

This development has been designed to integrate seamlessly with Commercial Bay. Its upper floors will also be remodelled to contain high quality office space & unique food & beverage options, including a rooftop bar.

Commercial Bay & its retail wrap’s Customs St frontage yesterday.

Mr Pritchard said phase one of the Commercial Bay retail remained on schedule, with international powerhouse H&M opening its flagship 3800m² store fronting Customs St in a fortnight, on Thursday 30 August. Passersby have been able to watch H&M’s creation in the new lowrise building beside the 21 Queen St offices of Zurich House, as windows have started to be placed at lower levels of the 39-storey Commercial Bay tower at the corner of Customs & Albert Sts.

“This marks a significant milestone for the transformational development which is reinvigorating the heart of the central city,” Mr Prithcard said. “The superb 4-storey retail offering promises to be the country’s premier H&M destination.

“Phase 2 of the Commercial Bay retail & the new PwC Tower have revised estimated completion dates, following the confirmation of a completion programme from main contractor Fletcher Building Ltd.

The revised completion dates are September 2019 for the Commercial Bay retail & December 2019 the new PwC Tower.

“The programme provided by Fletcher Building has been independently reviewed by Precinct’s expert programmer, RCP, who confirm the revised dates are achievable, subject to the main contractor’s performance.

“Precinct remains confident with the provisions of its construction contract, which protect the business from losses due to contractor delay.

“While any delay in a project is disappointing, we believe Fletchers are maintaining a very high standard of quality during a very challenging period within the construction industry.”

Commercial Bay’s entrance on to Quay St.

The new timeframes also affect prospective tenants: “Precinct continues to work closely with retailers at Commercial Bay to communicate the revised occupation dates. For those occupiers coming into the new PwC office tower, all have lease terms which extend beyond the revised completion dates of the office tower.”

Mr Pritchard said Commercial Bay continued to achieve a good level of leasing enquiry. Precinct had secured retail commitments to 76% and office commitments to 78%: “The $1 billion Commercial Bay waterfront development & lifestyle district is destined to become Auckland’s newest shopping, dining & social hub, offering a vast range of food & beverage outlets.”

Links:
Precinct Properties
Precinct Properties annual report
Commercial Bay

Related stories today:
Precinct Properties presents a long list of positives from development & in financial structure
Precinct Properties valuations & profit up, debt low
The 1 Queen St redevelopment

Attribution: Company release.

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Precinct Properties valuations & profit up, debt low

Precinct Properties NZ Ltd increased its net profit after tax by 57.2% to $254.9 million (2017: $162.1 million) in the year to June. The quality of Precinct’s portfolio including its active development pipeline has resulted in a portfolio revaluation gain of $208.7 million, or 9.0%.

Image above: The trio of buildings at the centre of Precinct Properties’ strong performance – the existing PwC Tower at right, the new PwC Tower under construction and the existing HSBC House at 1 Queen St, to be redeveloped into a hotel with office above.

Net operating income (distributable earnings), which adjusts for a number of non-cash items, has increased by 2.5% to $76.6 million ($74.7 million). This equates to 6.32c/share, in line with guidance (2017: 6.17c/share).

Revenue growth of 3.6% was primarily due to the completion of Wynyard Quarter stage 1, which was partially offset by foregone income related to development activity and 10 Brandon St, Wellington. After allowing for these transactions & activity, on a like-for-like basis gross rental income was 3.7% higher. This growth has driven an uplift in NPI by 5.4% to $95.3 million ($90.4 million).

As at 30 June 2018, Precinct’s portfolio value increased to around $2.5 billion following the strong revaluation gain. Precinct’s net tangible assets/share were up 12.9% to $1.40 (2017: $1.24).

Chief executive Scott Pritchard said yesterday: “The last financial year has delivered another strong result for our business. As we moved forward with our strategy, we progressed a number of initiatives and achieved key milestones during the year. We have continued to take an active management approach with both our investment portfolio and our development pipeline, leveraging Precinct’s market position.”

Focusing on a number of capital management initiatives during the year has resulted in $250 million of capital raised through the completion of a convertible notes offer & bond issue. Precinct also sold a 50% interest in the ANZ Centre in Auckland and sold 10 Brandon St in Wellington. These assets totalled $191 million of capital recycled.

“At year end our investment portfolio has continued to benefit from strong occupier markets. Achieving a high overall portfolio occupancy of 99% at year end and weighted average lease term of 8.7 years demonstrates this. Our Auckland portfolio has performed particularly, well with occupancy sitting at 100%, reflecting demand for premium inner-city office space. In Wellington, we have also reduced vacancy.

“In both Auckland & Wellington, we have successfully leased major expiries well ahead of vacancy. At the AMP Centre in Auckland, the QBE expiry has been fully leased at a premium of 17% to previous rentals. At Aon Centre in Wellington, 3 floors have been leased on the former IAG tenancy, with 2 remaining floors becoming available in early 2019.”

Mr Pritchard said the Auckland hotel market was experiencing unprecedented levels of growth in demand, which is forecast to persist through further growth in tourism numbers until at least 2025: “While a number of new hotel projects have been announced in the last 24 months, the increase in supply is expected to still fall short of demand over the short term and reach equilibrium over the medium to long term. This is expected to underpin robust room and occupancy rates.”

Commercial Bay

Commercial Bay remains on track to deliver a yield on cost of 7.5% and an increased profit on cost of 41% (June 17: 31%) or $283 million. Based on current project metrics, there remains a further $100 million of unrecognised development profit expected to materialise on completion.

Bowen Campus

In Wellington, construction works have continued to progress well over the last 12 months. We have now completed the facade installation at Charles Fergusson Tower with on floor works continuing. All works are targeted for completion late December 2018.

At Bowen State Building we have completed the majority of the structural works for the building including the north and south shear walls. The façade is now 90% complete for the building, installed from Level 1 to 10. On floor works are also underway to all levels.

Occupation of Bowen State Building by New Zealand Defence Force is expected in Q3 2019.

Financial highlights:

  • Net profit after tax increased by 57.2% to $254.9 million ($162.1 million)
  • Net property income, up 5.4% to $95.3 million ($90.4 million)
  • Net operating income, up 2.5% to $76.6 million ($74.7 million)
  • Full-year dividend, up 3.6% to 5.8c/share (5.6c/share), representing a 100% payout ratio (under AFFO – adjusted funds from operations)
  • Property revaluation gain of $208.7 million – 9% ($77.5 million)
  • Net tangible assets/share, up 12.9% to $1.40 ($1.24)
  • Earnings guidance for the June 2019 financial year, net operating income of about 6.60c/share, dividend expected to increase by 3.4% to 6c/share

Capital management:

  • $191 million of asset sales, providing capacity for new projects
  • $250 million of non-bank funding secured
  • Post-balance date refinancing of $760 million bank debt facility
  • Strong financial position, gearing of 25.0% (25.1%); pro forma gearing reduced to 19.4% at balance date following asset sales

Commercial Bay:

  • Advancing retail commitments to 76% (46% at June 2017) and office commitments to 78% (2017: 66%)
  • Yield on cost unchanged at 7.5%, with an increased profit on cost following the revaluation of 41% (June 2017: 31%), or $283 million
  • Phase 1 of the retail remains on schedule, with H&M opening its flagship 3800m² store on Thursday 30 August
  • A revised completion programme has recently been provided.

Bowen Campus:

  • Charles Fergusson Tower on track for completion in December & occupation by Ministry of Primary Industries
  • Bowen State Building to be occupied by NZ Defence Force, with lease starting April 2019
  • Yield on cost of 7.0%+, with an increased profit to 18%.

Future development opportunities:

  • Design has advanced for Wynyard Quarter development stages 2, 3 & 4; Precinct anticipates the second stage of the development will start in the next 6 months
  • Building design & marketing underway for precommitment leasing for the remaining development land at Bowen Campus.

Investment portfolio:

  • Auckland fully leased
  • Occupancy of 99% (2017: 100%) and a weighted average lease term across the portfolio maintained at 8.7 years (2017: 8.7 years)
  • 41 lease transactions completed, encompassing over 21,900m² & 598 parking spaces
  • Strong demand for space, with QBE expiring floors leased ahead of vacancy and 3 floors of IAG expiry leased at Aon Centre, Wellington
  • Strong like-for-like income growth of 3.0% – Auckland up 3.1%, Wellington up 2.9%
  • Generator occupancy of 73%, well above expectations; with 75% (9500m²) of its space launched during the year, the Generator business recorded a loss, as anticipated for this trading-up period.

Links:
Precinct Properties
Precinct Properties annual report
Commercial Bay

Related stories today:
Precinct Properties presents a long list of positives from development & in financial structure
Precinct Properties valuations & profit up, debt low
The 1 Queen St redevelopment

Attribution: Company release.

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Goodman & Singapore fund sell VXV portfolio to Blackstone

The joint venture between the Goodman Property Trust & Singapore sovereign wealth fund GIC has sold its VXV office portfolio along Fanshawe St in the Auckland cbd to funds managed by US asset manager Blackstone Group LP for $635 million.

The gross sale price of $635 million – $165 million above the estimated value after 2 buildings were added to the portfolio last June – reflects a passing yield of 6.6%.

GIC entered the joint venture, Wynyard Precinct Holdings Ltd, in 2014, making its first investment in New Zealand property. Goodman held 51% and GIC 49% of the venture.

The VXV commercial precinct is on the Victoria Park end of the Wynyard Quarter, which has turned a former industrial & port district into a smart & upmarket office, café & residential precinct. The VXV portfolio comprises 7 lowrise office buildings containing about 88,000m² of space.

John Dakin, chief executive of the Goodman trust’s manager, Goodman (NZ) Ltd, said today: “This is a defining transaction for our business as it completes a repositioning programme that has established the Goodman Property Trust as the country’s leading provider of high quality industrial space. Following this & other contracted sales, Goodman’s $2.2 billion portfolio will be almost 100% invested in the Auckland industrial market.

“We have made tremendous progress with our development programme over the last 5 years, with more than $670 million of new projects improving an already high quality portfolio. The $1.2 billion of asset sales funding this development activity have also deleveraged the balance sheet. With an expected loan:value ratio of below 20% following this sale, we have substantial capacity for future development & investment opportunities.”

The transaction, which remains subject to Overseas Investment Office & freehold landowner approval, is expected to settle late in the 2019 financial year (in the first quarter of next calendar year) and will add about 2.5c to the trust’s pro forma net asset backing. The settlement timing means the sale is not expected to have a material impact on earnings or distributions for the 2019 financial year.

Earlier stories:
2 February 2018: Blackstone’s Arena Living buys Mt Eden Gardens
27 June 2017: Goodman-GIC joint venture settles Bayleys House purchase
14 May 2017: Goodman-GIC joint venture adds Bayleys House to portfolio
>17 February 2016: Blackstone buys Lendlease’s NZ retirement villages

27 March 2015: Fletcher & Goodman sign up for new Wynyard Quarter building
7 November 2014: Goodman Group buys another Wynyard development block
7 November 2014: GIC buys into Goodman waterfront partnership

Attribution: Company release.

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New consent application lodged for America’s Cup

Published 15 April 2018

Auckland Council property arm Panuku Development Auckland lodged a new resource consent application on Friday to develop the infrastructure to host the 2021 America’s Cup yachting contest.

The new application followed approval from the council’s governing body for the revised Wynyard Hobson proposal after agreement was reached between the council, the Government & Emirates Team NZ.

Under the Wynyard Hobson proposal, up to 5 bases will be created on the eastern side of Wynyard Point, Hobson Wharf will be extended by 74m to accommodate one double base extension, and the cup defender, Emirates Team NZ, will use the Viaduct Events Centre on Halsey Wharf as its base.

The resource consent application will be posted on the Auckland Council website this Monday, 16 April, and will be publicly notified for a period of public submissions, expected to be from 30 April-28 May.

The application will remain as a direct referral to the Environment Court, with a decision expected from the court in October.

The council will make a further application to relocate SeaLink & the commercial fishing fleet once on-going investigations on alternative location options are completed.

Earlier story:
4 April 2018: More consents plus Sealink & fishing fleet relocation needed as America’s Cup agreement reached

Attribution: Council release.

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Agreement in principle for Auckland to host America’s Cup

Auckland mayor Phil Goff announced an in-principle agreement today between Auckland Council, the Government & Emirates Team NZ for Auckland to host America’s Cup 36 in 2021.

The in-principle agreement confirms the location of the America’s Cup bases and is subject to a vote by the council’s governing body on Thursday.

The business of that meeting is:

  1. To update the governing body on the investigation works led by the Crown on base location options for the 36th America’s Cup and to outline the Hobson Pt option agreed by the mayor & Economic Development Minister David Parker, and
  2. To agree to proceed with the lodgement of a resource consent application for the Hobson Pt option and withdraw the Wynyard Basin resource consent application.

You can check the links to the agenda below, but there’s nothing in them. The council will post a comprehensive agenda report before the meeting.

Mr Goff said: “Today we can look forward to hosting an America’s Cup in New Zealand. It’s good for Auckland and great for Kiwis who will get to experience in person the thrill of an America’s Cup contest in 2021 and cheer our team on.

“We have agreed a base configuration that is less expensive than previous options and requires a much smaller extension into the harbour.

“It allows the earlier removal of hazardous substance tanks from the southern part of the point, is more straightforward to consent, will be quicker to construct and creates a positive legacy for Auckland.

“The cup will bring vibrancy & economic benefits to Auckland and a chance to showcase our city & harbour, cutting-edge technology & the sporting skills of Kiwis.

“Hosting the cup enables the council to improve the city’s waterfront & city centre, and the facilities can be used again at minimal cost for further cup defences.

“The land on Wynyard Pt will ultimately become a linear park which will be a great public space, and the sheltered water area between Wynyard & Halsey St wharves will also be a valuable asset for other maritime sports events such as dragon boats & waka ama.”

Mr Parker said: “I am very pleased to advise that we have succeeded in negotiating a venue on the Auckland waterfront that Aucklanders & all New Zealanders can be proud of. It significantly reduces the intrusion into the harbour at the lowest practical cost.

“Prime Minister Jacinda Ardern, mayor Goff & I all stated our commitment to limiting the intrusion into the harbour, while achieving a word-class venue for the cup event, and this delivers that.”

America’s Cup costs & base location

Mr Goff said: “Construction & related costs totalling $212 million will be shared between council & government, with council contributing $98.5 million. Included in the Government contribution is the Team NZ hosting fee.

“Under the agreement, the Viaduct Events Centre will now be home to Emirates Team NZ without extending Halsey St wharf into the harbour. One base will be on a Hobson Wharf extension and up to 5 bases on the eastern side of Wynyard Pt.

“Officials from all parties have worked collaboratively over the past several months. I acknowledge the role played by all the parties in what was a robust negotiation.

“I look forward to working with Government & Emirates Team NZ to deliver the best America’s Cup yet.”

A new resource consent will be put to the council’s governing body this Thursday and, subject to its approval, will be lodged by Friday 6 April.

The alliance design & construction partners to deliver the infrastructure for the America’s Cup have also been appointed. They are McConnell Dowell, Downer, Beca and Tonkin & Taylor.

Links:
Governing body extraordinary meeting agenda, Thursday: 9, America’s Cup 2021 – decision on location & infrastructure requirements (covering report)
C1, Confidential: America’s Cup 2021 – decision on location & infrastructure requirements (covering report)

Attribution: Council release.

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Precinct Properties targets future markets

Apart from confusion about whether to vote on director appointments by show of hands or by filling in paperwork, and uncertainty over what impact changes at Ports of Auckland might have, Precinct Properties NZ Ltd’s annual meeting yesterday was all forward progress.

The vote was an odd issue to get caught up in. When company chair Craig Stobo said the vote would be by hand, one shareholder asked: “Are you saying proxies don’t count?”

Shareholders Association representative Grant Diggle told Mr Stobo the association’s longstanding policy was to hold polls, for transparency, disclosure & good governance. Deputy chair Don Hulse – stepping in for Mr Stobo, who was one of 2 directors facing re-election – said the vote would proceed with a show of hands but, if shareholders demonstrated a strong desire for a poll, that would follow.

The vote was strongly in support of re-election and the poll was avoided. But, at another NZX-listed company meeting in the same building a few hours later, unitholders of the Vital Healthcare Property Trust voted by poll, the outcome was delayed, but nobody found it a problem.

Risk profile lowered, portfolio quality up

Mr Stobo said in his address to the meeting Precinct had reduced its risk profile as major developments were completed or passed construction milestones, and it was lifting portfolio quality.

Net profit after tax was up 17.3% to $162.1 million after achieving a revaluation gain of $77.5 million, and net tangible assets/share rose 6% to $1.24.

A bond offer, expected to be opened next week, will continue the company’s diversification of its funding sources. In September, Precinct raised $150 million of 4-year, fixed-rate subordinated convertible notes, reducing its gearing from 25% to 18%. Mr Stobo said both notes & bonds were capital management solutions which suited Precinct’s current strategy & opportunities: “It gives us the comfort of having the capital available to match our development commitments while ensuring that earnings are not diluted in the short term. Post-issue [of the notes], our committed gearing has reduced, supporting growth through a flexible funding option.”

Precinct reviewed its dividend policy last year, matching dividends with cashflow, as defined by adjusted funds from operations (AFFO), with the aim of producing a more transparent & sustainable dividend flow.

The company has indicated before that it expected dividends to rise as it advances its development programme. For the first quarter of the 2018 year, it’s lifted the dividend by 3.6% to 1.45c/share, and it expects to pay 5.8c for the full year (up from 5.6c), maintaining a 90% payout ratio.

100% occupancy

Chief executive Scott Pritchard presented a slide to the annual meeting to show the growth in portfolio occupancy, now 100%, and the weighted average lease term increasing to almost 9 years, then talked of how to improve performance further: “Precinct has always been a city centre specialist and we will continue to invest in high quality, strategically located office real estate. However, both the board & management believe that, to advance our position as a city centre specialist, considering a broader mix of real estate offers greater opportunity for Precinct to create value for shareholders.

“City centres around the world are enjoying a resurgence. We are taking advantage of this growth in a variety of ways. Commercial Bay is a great example, with Precinct developing a premium retail offering in the heart of the cbd. Fundamentally, we are growing in, and with, the cities we are part of.

“We have a clear strategy for creating vibrant environments with a broad retail, leisure and food & beverage offering. Our aim is to create precincts that our clients like working in, and that cbd residents, visitors & whole communities enjoy being in.”

Developing for the future

Perhaps one of the most important features of the strategy is to develop real estate for the future – a quite different view from developing property with an immediate cashflow in mind and extending it as long as you can.

“We currently have $900 million of developments which are underway and have identified a further $600 million development pipeline within our portfolio. This is a significant increase from 5 years ago, when the business had no development capability.

“…. Not only are our earnings growing, but we are also achieving a significant increase in portfolio quality. Achieving a positive result in all 3 measures [earnings, weighted average lease term as a result of development activity and the decline in the average age of the portfolio] is a great outcome and further reinforces the strength of our business.

“Our asset age has nearly halved, from 21 to 11 years. Along with an extended weighted average lease term & full occupancy, we have secured & advanced development in highly strategic locations. We have shifted more weighting to Auckland, which now accounts for 72% of our portfolio.

“Our focus on city centres, particularly Auckland, is very positive. With continued growth supported by key drivers such as net migration & tourism, we believe we are well placed to benefit from the city’s strong growth going forward.”

Commercial Bay at centre of change

Precinct’s biggest central city project is Commercial Bay, under construction between Queen, Customs, Albert & Quay Sts and above the rail tunnels into Britomart.

“Auckland is growing and this looks set to continue. And, like cities all around the world, it is seeing increasing centralisation. This slide illustrates the committed & forecast private & public investment in Auckland city. Most of the works are occurring in close proximity to Commercial Bay.

“A major focus for Precinct continues to be the extensive public regeneration which is set to occur on all streets surrounding Commercial Bay. Auckland is growing fast and billions of dollars are being invested in regional infrastructure such as the city rail link & new bus network. Of course, more recently there has been the commitment by New Zealand’s new government to a light rail system which will support Auckland city’s ongoing economic performance.

“Our research shows Auckland city centre population growth in 2016 was 17% and it is now growing 6 times faster than Auckland as a whole. With over 12,000 people moving to the city centre in the last 3 years, the population is already 15 years ahead of previous predictions of 45,000 people by 2032.”

As for Commercial Bay itself, Mr Pritchard said: “Having launched the project in 2015, we have gained an additional $88 million increase in the project’s value. Lease commitments have also increased to around 50% of the retail space and 66% of the office space. We are attracting leading corporate clients, and we are particularly pleased about the high quality of local & global retail & food brands choosing Commercial Bay. They will give Auckland a whole new retail & dining experience in the heart of the city.

“We are now forecasting a development profit for Commercial Bay of $213 million, reflecting a return on cost of 31%.

“Commercial Bay will include a range of food & beverage, including a communal dining offer designed by the legendary New York-based AvroKO, who are one of the world’s most respected names in hospitality design.

The name for this food offering is Harbour Eats, which is distinctively Kiwi, but AvroKO will bring the international flair. The 700-seat eatery will use plenty of natural greenery & foliage, making most of the open air atrium that will sit right at the waterfront location. This will be a truly world-class dining precinct.”

Wynyard Quarter

In the Wynyard Quarter, Precinct has completed stage 1 of its Innovation precinct: “The first stage of Wynyard consists of 2 buildings totalling around 13,000m² of office space. Achieving 100% occupancy upon completion of both buildings is a great result and we are delighted to see the development complete ahead of programme and consistent with budget. Precinct has achieved a development profit of 18%, or $16.2 million, on this project.

“Our involvement in this Innovation precinct shows how we are meeting different client needs in different ways, and our commitment to building strong partnerships. This is achieved through a joint venture with Panuku Development Auckland, an Auckland Council-controlled organisation, and on what is the last site left on Auckland’s waterfront.

“Our buildings here have a particular focus on sustainability & innovation. During the year, we acquired a 50% interest in Generator NZ Ltd, the co-working & shared office space provider. Quality co-working spaces are growing and are substantial businesses in cities around the world. We see the acquisition of a stake in Generator as being consistent with our strategic focus on building client relationships and increasing our service levels.

“This year Generator was also appointed by Ateed (Auckland Tourism, Events & Economic Development) to manage Grid AKL in the Innovation precinct, where it now operates almost 10,000m² of space and is leading an approach to co-working spaces we expect to see grow.”

Bowen Campus

In Wellington, Precinct’s Bowen Campus project is at the centre of a Government precinct: “As with Wynyard Quarter, we enjoyed both a revaluation uplift at Bowen and 100% leasing pre-commitment following the Crown exercising their right to lease the remaining vacant floors at the campus.

“The Kaikoura earthquake changed the fundamentals of the Wellington market, with many buildings still closed. With limited prime stock available, all research houses are predicting increased occupier demand. However, we too have been impacted following the earthquake, with Deloitte House being closed for a period and remaining largely unoccupied since it reopened in March. Investigations are continuing to be undertaken to try & identify the best solution for the property & its existing clients.”

Further opportunities 

Mr Pritchard said several more, attractive development opportunities available within its portfolio: “Our property at 1 Queen St is part of the Commercial Bay precinct and enjoys a prime waterfront location offering very good potential for further development as this whole area continues to grow.

“At Wynyard we have the option to develop 3 remaining sites covering 30,000m², and we are already in discussion with occupiers for stage 2, developing another 8000m².

“At Bowen Campus we can build a further 20,000m² of office space suitable for government & corporate occupiers.
“Each of these opportunities provides Precinct with feasible opportunities. We hope to commit to the second stage of Wynyard Quarter within the next year.”

Attribution: Annual meeting, presentation.

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Grand downtown & waterfront plans raise the question: The money?

Some grand plans to advance Auckland Council’s 5-year-old waterfront & city centre plans will go to the council’s planning committee on Tuesday.

Image above: A Wynyard Quarter “regional destination park” is proposed at the outer point where the idea of an iconic structure was early tossed around.

2 words are central to the planning review: “Whose money?”

Take these 4 statements sprinkled through the report to the committee:

  • “The proposed funding & delivery scenarios are to be interrogated & tested during the long-term plan process. Priority projects will be supported by business cases, including a total value analysis. Once decisions have been made, they will be incorporated into the long-term plan public consultation.”
  • “For Wynyard Quarter, key drivers for the refresh include the need to create more feasible development packages, in order that returns from private development can contribute to the costs of public infrastructure & open space.”
  • “A realignment of the Wynyard Point park… delivering more rational development sites for private investment.”
  • “Funding is in place for the Auckland Transport bus projects but a realignment of or addition to budgets for other projects will be required.”

Those financial points are crucial to how streets around the central city and the waterfront itself are to offer better use, and how public transport will fit, but they aren’t the priority.

What is priority is to unleash a feast of ideas. What ought to be priority is a co-ordinated view of how these ideas can be brought forward practically, and funded.

Weighing on the offer are these:

  • The future of the port’s 2 functions, cruise & cargo
  • Hosting of the America’s Cup and hosting of the APEC (Asia-Pacific Economic Co-operation) meeting, both in 2021.

Devising a programme and working out the requirements for the yachting event make sense because it’s a mega-dollar occasion from which Auckland stands to profit enormously. The visit of the foreign politicians is one the city ought to be able to take in its stride.

The next round of publicly discussing the council’s future port study is scheduled for the planning committee’s October meeting. Again, money is the key feature – firstly, what Auckland stands to lose by sending the freight business out of town; secondly, what it might gain by having a new port conveniently nearby; thirdly, how a cruise sector perhaps treble the size it is now can be accommodated.

Down at ground level, the planning report touches on bus routes, pedestrian & cycle-friendly access between the city waterfront & Wynyard Quarter, and pedestrian boulevarding the city-centre few blocks of Quay St (though it’s not spelled out quite so plainly).

But for all the focus on improving public transport access, the report suggestions emanating from Auckland Transport would have isthmus bus commuters at the bottom of town walking about 3 blocks further than they do now to reach their stop. Without too much cover from the elements.

The whole committee series of workshops has been conducted behind closed doors, and there is no apparent reason for that, other than the belief that participants in a discussion should be free to speak their minds without the rest of the world hearing, without statements being taken out of context, and – most importantly, but usually knocked back to least important – without the public being taken on the discussion journey until something concrete is laid out.

What is mapped out is the use of the public realm – affecting many private interests – and if discussion is public there’s a good chance somebody outside the forum will add an idea that hadn’t been thought of.

Despite the freedom of all that private discussion, the answer to the crucial financial questions is not in the agenda. If the council runs to form, it will skirt the question and the uncertainty will remain.

The report’s authors were Senior Panuku project planning leader Joanna Smith, Panuku & Ateed cruise project manager John Smith and Auckland Transport city centre & rapid transport network initiatives manager Daniel Newcombe.

Plan changes on the way

Also on the agenda for the planning committee’s meeting on Tuesday are a number of plan changes for the Auranga development at Drury, from Fletcher Residential Ltd at 3 Kings, for Whenuapai and to correct technical errors & anomalies in the unitary plan, which is now largely operative.

Links:
Planning committee agenda, Tuesday 5 September (9.30am, Town Hall)
9, City centre & waterfront planning refresh
11, Auckland unitary plan (operative in part) – private plan change request from Karaka & Drury Ltd – Auranga B1
12, Auckland unitary plan (operative in part) – private plan change request by Fletcher Residential Ltd – Three Kings 
13, Auckland unitary plan (operative in part) – proposed plan change – Whenuapai 
14, Auckland unitary plan (operative in part) – proposed plan change – administrative plan changeto correct technical errors & anomalies

Attribution: Council committee agenda, mayoral release.

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Goodman-GIC joint venture settles Bayleys House purchase

The joint venture between the NZX-listed Goodman Property Trust & Singapore sovereign wealth fund GIC Pte Ltd has settled its $62.3 million purchase of Bayleys House in the Wynyard Quarter.

The deal was announced on 12 May.

The acquisition of Bayleys House and the $86.2 million purchase of the neighbouring Datacom Building, which settled in May, take joint venture company Wynyard Precinct Holdings Ltd’s portfolio to 7 buildings worth over $470 million.

The 6-storey 8106m² Bayleys House backs on to the Fonterra Centre, also in the portfolio. Fonterra at 109 Fanshawe St, and Bayleys at 30 Gaunt St, also front Halsey St in the VXV Precinct which has been developed by ASX-listed Goodman Group on leasehold land owned by Viaduct Harbour Holdings Ltd.

The 7-storey 16,735m² Datacom building is across VXV Plaza from Bayleys, on the corner of Gaunt & Daldy Sts.

Predominantly leased to real estate specialist Bayleys, technology provider IBM & law firm Mayne Wetherell, Bayleys House’s leases incorporate fixed review structures and have a weighted average term of 9 years. The ground-lease obligations are structured for a period of 15 years.

Goodman Group undertook the development on a build-to-lease basis. The purchase price reflects an initial yield of 7.6% on contract rentals, and additional fitout rent increases the passing yield to 8.8%.

Earlier story:
14 May 2017: Goodman-GIC joint venture adds Bayleys House to portfolio

Attribution: Company release.

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