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Precinct nails down Crown leases

NZ Newswire logoNZ Newswire 31/07/2016 Paul McBeth

Precinct Properties New Zealand has signed the Crown to four long-term leases in Wellington which it says will generate about $500 million over the next 15 years.

The Auckland-based company completed its biggest leasing transaction after three years of negotiations with the government, which will secure 68,000 square metres of office space on a weighted average lease term of 14.6 years, it said on Monday.

"The long-term leases represent some half a billion dollars in income over the lease terms and provides material earnings security for Precinct, while significantly strengthening our portfolio quality in line with our long-term strategy," chief executive Scott Pritchard said.

Precinct has been tilting its national portfolio to have a greater exposure to Auckland, including the $681m Commercial Bay development in city's CBD, with the outlook for Wellington clouded by the government's attempts to cut down on spending.

Precinct missed out on the government's first property review in 2012, not long after buying the 10-storey Bowen State and 15-storey Charles Fergusson buildings for $50.4m.

Precinct would now spend $203m upgrading the Bowen Campus and $55m on Pastoral House, Mayfair House and 3 The Terrace.

The projects will be funded through Precinct's existing bank facilities, which will take committed gearing to about 39 per cent, up from 12.8 per cent at the end of last year.

Precinct shares last traded at $1.255 and have edged up 0.4 per cent so far this year, lagging behind a 16 per cent gain in the S&P/NZX 50 Index.

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