19 Feb 2014

Precinct focuses on strategic sites

8:23 am on 19 February 2014

Office building owner and manager Precinct Properties says its development plans are likely to depress its earnings in the short term.

But Precinct says that having a long-term development pipeline will provide enhanced earnings growth as well as higher quality earnings.

On top of its key development prospects, the Bowen campus in Wellington and the Downtown shopping centre in Auckland, Precinct says it is in exclusive negotiations with Waterfront Auckland to become its development partner for commercial office property within the Wynyard Quarter.

The company lifted first-half net profit 67 percent, reflecting improved occupancy of its Auckland buildings, recent acquisitions and one-off gains.

Precinct's net profit for the six months ended December rose to 39.5 million dollars from 23.6 million in the same period a year earlier. Operating income was up 22 percent.

The chief executive, Scott Pritchard, says his company plans to fund development by selling non-core properties.

"We'll sell some of our assets that we have at the moment ... take the capital from those sales and re-deploy it into these developments," he says.

Such "churn" could temporarily affect earnings, but it was important that the company created its own real estate.