PCT precinct prop nz ltd & invest ltd stapled security (ns)

Ann: ASSET: PCT: Precinct agreement to buy No1 Qu

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    • Release Date: 25/03/13 13:34
    • Summary: ASSET: PCT: Precinct agreement to buy No1 Queen Street in Auckland
    • Price Sensitive: No
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    PCT
    25/03/2013 11:34
    ASSET
    
    REL: 1134 HRS Precinct Properties New Zealand Limited
    
    ASSET: PCT: Precinct agreement to buy No1 Queen Street in Auckland
    
    Precinct Properties New Zealand (NZX: PCT) announced today that it has
    entered into an agreement to buy the HSBC office tower at No 1 Queen Street
    in Auckland, conditional on Precinct board approval (including the completion
    of due diligence) and Overseas Investment Office approval.
    
    The waterfront tower adjoins the Downtown Shopping Centre which Precinct
    recently acquired and sits adjacent to the Precinct-owned Zurich House, PwC
    Tower, and AMP centre.
    
    Scott Pritchard, Precinct's Chief Executive, said, "This is an exciting
    opportunity for Precinct. This acquisition along with the recently acquired
    Downtown Shopping Centre consolidates our Auckland footprint, as well as
    providing us with an enormous amount of flexibility in considering our
    options for the Downtown Shopping Centre."
    
    "With almost 2 hectares of land positioned on Auckland's CBD waterfront,
    excellent access to public transport and well established amenities, it is
    our ambition to create a world class heart to Auckland's city centre."
    
    PCT will pay a private vendor $103 million for the tower representing an
    initial yield of 7.7%.
    
    Mr Pritchard said, "Significant reductions in prime and A-grade vacancy over
    the past 12 months and no new supply have resulted in a market where well
    located assets should meet strong demand from occupiers and benefit from
    market rental growth. We believe that these factors will underpin the benefit
    of this acquisition, as well as leading to value growth for the balance of
    our portfolio."
    
    Completed in 1972 and refurbished in the late 1990's, the property benefits
    from large rectangular floor plates of around 1,000 square metres,
    uninterrupted views of the Harbour and an attractive rental price point. The
    building occupies a site of 2,322 square metres and provides the potential
    for further development on the north-west waterfront portion of the site
    through Precinct's ownership of the adjacent Downtown Shopping Centre.
    
    The 21 level tower includes 17 levels of office space, 1,160 square metres of
    retail space, 127 car parks and is 88% occupied with a Weighted Average Lease
    Term (WALT) of around 4 years. Major occupiers include HSBC, Baldwins
    Intellectual Property and the New Zealand Transport Agency. The vendor will
    provide a 6 month rental underwrite over the 2,300 square metres
    (approximately two full floors) of vacant space.
    
    Following the acquisition, Precinct's weighting to Auckland will increase to
    57% consistent with its investment bias to this city. Precinct's occupancy
    and WALT will remain unchanged.
    
    Precinct has secured bank credit committee approved debt funding to complete
    the acquisition which would result in an increase in bank facilities from
    $535 million to $635 million. If debt funded, the acquisition would result in
    Precinct's gearing increasing from 33.5% to 37.5%. Given expectations for
    valuation growth, gearing would be expected to stay around this level
    following the completion of existing committed capital expenditure.
    
    Settlement of the acquisition is expected to take place in approximately five
    months' time and during this period the Board intends to review all funding
    options available including debt, equity and the sale of non-core assets. The
    Board will seek to balance considerations of portfolio optimisation, earnings
    growth and maintaining an appropriately geared balance sheet.
    
    The acquisition is expected to be accretive to earnings from settlement due
    to the initial yield of 7.7%, and to contribute to earnings growth over the
    coming years due to the superior prospects for rental growth for this asset.
    The extent of earnings accretion will depend on the choice of acquisition
    funding.
    
    For further information, contact:
    Scott Pritchard
    Chief Executive Officer
    Office: +64 9 927 1640
    Mobile: +64 21 431 581
    Email: [email protected]
    
    George Crawford
    Chief Financial Officer
    Office: +64 9 927 1641
    Mobile: +64 21 384 014
    Email: [email protected]
    
    About Precinct (PCT)
    Precinct is New Zealand's only specialist listed investor in prime and
    A-grade commercial office property. Listed on the New Zealand Exchange, PCT
    currently owns 16 New Zealand buildings - Auckland's PricewaterhouseCoopers
    Tower, ANZ Centre, SAP Tower, AMP Centre, Zurich House and Downtown Shopping
    Centre; and Wellington's State Insurance Tower, Vodafone on the Quay, 171
    Featherston Street, 125 The Terrace, No. 1 and 3 The Terrace, Pastoral House,
    Mayfair House, 80 The Terrace, Deloitte House and Bowen Campus.
    End CA:00234498 For:PCT    Type:ASSET      Time:2013-03-25 11:34:42
    				
 
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