Announcement

FLLYR: PCT: Delivering on strategy underpins strong operating result 09:17am 
PCT
13/08/2020 09:17
FLLYR
PRICE SENSITIVE
REL: 0917 HRS Precinct Properties New Zealand Limited (NS)

FLLYR: PCT: Delivering on strategy underpins strong operating result

Delivering on strategy underpins strong operating result
Performance summary for the 12 months ended 30 June 2020
Financial summary
o Solid leasing levels across the portfolio has achieved increased net
property income (NPI) by 2.1% to $97.2 million (2019: $95.3 million); after
adjusting for development projects, transactions and COVID abatements, like
for like NPI was 3.2% higher than the previous comparable period.
o Total comprehensive income after tax of $35.1 million (2019: $190.4
million).
o Revaluation movement of -$66.3 million, a decrease of 2.2% (2019: $161.7
million gain).
o Net Asset Value (NAV) per share of $1.45 (2019: $1.49).
o Adjusted funds from operations increased 5.9% to 6.29 cps (2019: 5.94 cps).

FY21 dividend guidance
o FY21 dividend guidance of 6.50 cps, representing a YoY increase of 3.2%.

Capital management
o Refinanced Precinct's $150 million bank debt facility due to expire in
November 2020.
o Settled the $162.8 million United States Private Placement (USPP) issue.
o Continued with asset recycling programme, sale of Pastoral House in
Wellington settled.
o Robust balance sheet with gearing of 28.8% (2019: 22.4%), substantially
under PCT borrower covenant level of 50%.

Investment portfolio performance
o High occupancy level of 98% achieved (2019: 99%) and a weighted average
lease term (WALT) of 8.0 years (2019: 9.0 years).
o Strong leasing during the year with 28 transactions, totalling over 12,600
square metres.
- Growth on contract rents was 8.0%
o Resilient portfolio performance during covid-19 lockdown, with total rental
abatement 1.3% of gross annual income ($1.7 million)
o Generator continues to perform well with strong revenue growth of 13% and
EBITDA of $1.8 million

Commercial Bay update
o The retail and hospitality precinct officially opened on 11 June 2020,
fully leased.
o Office tower has opened 97% leased, well ahead of expectations on
commitment.
o The first 2 months of retail trading have significantly outperformed
expectations, with estimated visitor numbers exceeding 2 million and sales
ahead of valuation levels.
o Post balance date, following the announcement on 12 August that Auckland
has moved to Alert Level 3, the Commercial Bay retail precinct has been
closed in accordance with New Zealand's Covid guidelines.

Development projects update
o Second stage of Wynyard Quarter, 10 Madden Street progressing well, fully
leased, on budget and on programme for completion end of 2020
- Expected total project cost of $72m with yield on cost of around 7.0%
o Second stage of Bowen Campus underway at 40 Bowen Street.
- Project 72% pre-committed with leasing to EY and Fujitsu secured
- Expected total project cost of $90 million and is expected to generate a
yield on cost of 6.6%, once fully leased.
- Discussions progressing with potential occupiers for 44 Bowen Street
o 30 Waring Taylor redevelopment underway for first Generator site in
Wellington
o One Queen Street redevelopment project in Auckland currently on hold.
- Assessing options to ensure the redevelopment maximises returns and asset
remains well positioned within our portfolio.

Environmental, Social and Governance (ESG) risks
o Precinct achieved Toitu carbonzero certification.
- Internationally recognised programme and demonstrates our commitment to the
environment and our business's sustainability.
o Precinct received a 2019 Global Real Estate Sustainability Benchmark
(GRESB) score of 77 in 1H20 (1H19: 69). Precinct is now trending ahead of the
global average of 72.

Precinct Properties New Zealand Limited (Precinct) (NZX: PCT) reported its
financial results for the 12 months ended 30 June 2020 today. The impacts of
COVID-19 on valuations contributed to total comprehensive income after tax
reducing to $35.1 million, offsetting a strong operating result. This result
compared with $190.4 million in the previous period. The difference is mainly
attributable to a strong FY19 revaluation and a devaluation for this period
of certain development assets within the portfolio.
Adjusted funds from operations (AFFO), which adjusts for several non-cash
items increased by 11.8% to $82.7 million (June 2019: $74.0 million) or
6.29cps. This strong result reflects the successful execution of the
long-term strategy combined with the stable and secure income our portfolio
generates through its high-quality clients and asset base. Reflecting this,
Precinct received 91% of its rent during lockdown levels 3 and 4 while also
being able to support those occupiers who needed assistance.
Full year dividends paid to shareholders and attributed to the 2020 financial
year totalled 6.30 cps, representing a year on year increase of 5.0% and an
AFFO dividend payout ratio of 100%.
Net property income for the period increased 2.1% to $97.2 million (June
2019: $95.3 million). After adjusting for developments, transactions and
COVID abatements, like for like income growth was 3.2% higher than the
previous comparable period.
Generator recorded gross operating revenue of $18.6 million with contribution
to net operating income of $1.8 million recorded for the period. Generator
was impacted during the last quarter of the financial year as a result of the
COVID-19 shutdown, primarily due to the lack of demand for events space.
With occupiers increasingly valuing flexibility, the medium-term outlook for
Generator remains positive.
As at 30 June 2020 Precinct's portfolio totalled $3.0 billion (June 2019:
$2.8 billion). Precinct's net asset value (NAV) per share at balance date was
$1.45 (June 2019: $1.49).
Further financial information can be found within the 2020 Annual Report at
https://www.precinct.co.nz/annual-reporting/2020-annual-results.
Scott Pritchard Precinct CEO said, "With the recent completion of Bowen
Campus and Commercial Bay, both on a fully leased basis, the Precinct
business is now well placed with a portfolio of new, high quality assets
occupied by a mix of Government, and investment grade office occupiers
coupled with some of the best global and local retailers."
"While work from home has been the topic of much debate, our own attendance
records demonstrate that the vast majority of our occupiers are back in the
office highlighting that the office remains key to the success of any
business."
Operational update
Precinct's portfolio has benefited from high occupancy and a long WALT during
the year with the overall portfolio occupancy maintained at 98% on a WALT of
8.0 years.
In total, 32 leasing transactions were completed across 21,300 sqm of space.
This includes securing a number of new clients and retaining existing clients
within the portfolio reflecting the quality of our investment assets. Rentals
achieved within the investment portfolio across 12,600sqm were on average
8.0% higher than previous contract rentals.
During the year and since year-end, Precinct has entered into new direct
leases totalling around 5,250 sqm for five Generator members to accommodate
their growth, demonstrating the benefits that Generator provides to the wider
portfolio. Recognising these benefits, the acquisition of the Dunbar Sloane
Building, centrally located at 30 Waring Taylor Street, will be the first
Generator Site in Wellington. The five-level character building,
encompassing 2,300 sqm of space, will be fully redeveloped and seismically
strengthened to 100% of New Build Standard. The offering will comprise
private offices, coworking and event spaces.
Commercial Bay update
Construction re-commenced at Commercial Bay following the easing of the
COVID-19 restrictions and reached completion in June of this year. The new
retail and hospitality precinct officially opened its doors on 11 June 2020
fully leased (June 2019: 95%). Precinct was delighted to welcome people to a
new and exciting part of their city and experience all Commercial Bay has to
offer.
Since opening, the centre has benefited from around 2 million visitors (to 9
August) and is performing ahead of expectations in terms of sales
performance.
Post balance date, Precinct is pleased to welcome the first of the office
occupiers to the new PwC Tower with PwC, Jarden, Minter Ellison Rudd Watts
and Chapman Tripp all taking occupation of their new space. Leasing across
the office tower is now at 97% (June 2019: 82%).

Development update
Wynyard Quarter
Construction re-commenced at 10 Madden Street in May this year and continues
to progress well. Despite the impacts of COVID-19, the programme for
completion remains at the end of 2020. The development will complete with
the office space fully leased and 3 retail units which are now available for
lease.
Bowen Campus
Following the successful delivery of Bowen Campus Stage One, we were very
pleased to announce in June that Precinct will be commencing the development
of the second stage of Bowen Campus. The project is being undertaken on a
pre-committed basis with leasing to EY and Fujitsu secured.
In addition, a Generator facility will also be provided over the ground and
first floor at 40 Bowen Street. A portion of the Generator private office
desks have already been pre-committed to EY. This further reinforces the
growing demand for flexible space in Wellington.
Completion of the project is scheduled for late 2022. Discussions are
currently underway with potential occupiers for 44 Bowen Street with interest
from both corporate and Government occupiers.
Board changes
In September 2019, Precinct appointed Anne Urlwin as an Independent Director.
Anne replaces Don Huse, who will step down in 2020 after serving 10 years on
the Board. Anne will also replace Don as Chair of the Audit & Risk Committee.

Anne is a professional director with many years' directorship experience. She
has experience in the corporate sector across a range of industries. Anne is
a Fellow of the Institute of Chartered Accountants of Australia New Zealand,
a Chartered Fellow of the Institute of Directors in New Zealand Inc, and a
Member of the Australian Institute of Company Directors.
Commencing a recruitment process in early 2019 for a new Independent Director
has been part of the Board's succession planning to ensure a seamless
transition of directors. We are delighted to welcome such a high calibre
director as Anne to the Board. Her skills and experience will further
strengthen Precinct's governance regime.
Craig Stobo, Precinct's Chairman said "During Don's tenure on the board
Precinct's strategy evolved, several capital management initiatives were
undertaken and the business committed to Commercial Bay. On behalf of my
board colleagues and management, I again thank Don for the significant
contribution he has made to Precinct since 2010."
Dividend payment
Precinct shareholders will receive a fourth-quarter dividend of 1.575 cps
(plus imputation credits of 0.063191 cps). Offshore investors will receive an
additional supplementary dividend of 0.0.028675 cps to offset non-resident
withholding tax (see note 2). The record date is 11 September 2020 with
payment to be made on 25 September 2020.
Outlook and guidance
2020 has undoubtedly presented a number of unexpected challenges at both a
local and global level as a result of the COVID-19 pandemic. Locally,
economic conditions and demand drivers for city centre real estate are slowly
becoming more apparent, however on 12 August 2020 Auckland returned to alert
level 3 and the rest of New Zealand was placed in alert level 2 for three
days. Uncertainty remains and the full effects of COVID-19 are still
evolving.
We recognise this short to medium term uncertainty within the New Zealand
economy. However, Precinct's well-located buildings, quality client base,
high occupancy and long weighted average lease term gives us confidence that
our strategy will continue to deliver in these more challenging times.
The Board expects AFFO for the 2021 financial year to be 6.50 cps, before
performance fees and a total dividend of 6.50 cps is expected to be paid.
This represents a 3.2% increase in dividends to shareholders.
Ends

Further information can be found within the 2020 Annual Report and results
presentation. You can find this at:
https://www.precinct.co.nz/annual-reporting/2020-annual-results.
Ends

For further information, please contact:
Scott Pritchard
Chief Executive Officer
Mobile: +64 21 431 581
Email: scott.pritchard@precinct.co.nz

George Crawford
Chief Operating Officer
Mobile: +64 21 384 014
Email: george.crawford@precinct.co.nz

Richard Hilder
Chief Financial Officer
Mobile: +64 29 969 4770
Email: richard.hilder@precinct.co.nz

About Precinct (PCT)
Precinct is New Zealand's only listed city centre specialist investing
predominately in premium and A-grade commercial office property. Listed on
the NZX Main Board, PCT currently owns Auckland's PwC Tower, AMP Centre, ANZ
Centre (50%), Jarden House, HSBC House, Mason Bros. Building, 12 Madden
Street, 10 Madden Street and Commercial Bay; and Wellington's AON Centre, NTT
Tower, No. 1 and No. 3 The Terrace, Mayfair House and Bowen Campus. Precinct
owns Generator NZ, New Zealand's premier flexible office space provider.
Generator currently offers 13,600 square metres of space across four
locations in Auckland.
End CA:00357879 For:PCT Type:FLLYR Time:2020-08-13 09:17:08

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