Precinct Properties (NZX: PCT) enters into new segment, shares down

Highlights

• Precinct Properties, a developer of commercial office spaces, has entered into a new segment
• It announced that it would develop multi-unit residential properties with Lamont & Co
• In the beginning, the new business will deliver Lamont’s existing strategy

Precinct Properties New Zealand Limited (NZX: PCT) announced on Tuesday (20 December 2022) that it had entered into a new segment of the multi-unit residential development market in partnership with Auckland-based real estate developer Lamont & Co.

The company, which is known for investing in commercial office property, said today that Precinct and Lamont & Co would jointly own its multi-unit residential business.

It said that it would initially focus on developing high-quality multi-unit residential areas in central Auckland.

PCT’s portfolio includes Auckland’s HSBC Tower, AON Centre, Jarden House, and the Deloitte Centre, among others.

Scott Pritchard, CEO of PCT, said that entering into a multi-residential market was a natural extension for the company. As a high-density city centre commercial property developer, residential will complement its overall strategy.

The company had discussed the residential property development strategy for a number of years, and this was an opportune time to start the venture, the CEO said.

Pritchard also pointed out that the current challenging market is a good opportunity for the company, with a greater range of good quality sites available.

In the beginning, the new business will continue the delivery of Lamont & Co’s existing portfolio, the CEO informed.

Quarterly update

In the quarterly update announced on 16 December 2022, the company announced a new joint investment partnership with a global private investment firm, PAG. The partnership will acquire 40 and 44 Bowen Street in Wellington for a price of NZ$240 million, the release said.

In the partnership, PAG will hold an 80% stake and Precinct will hold a minority stake of 20%. In the quarter, PCT also announced growth in its investment partnership with a Singapore sovereign wealth fund, GIC.

In November 2022, Precinct announced that it had secured an unconditional agreement to acquire 61 Molesworth Street in Wellington along with new 24,000 square meters of office space to be developed shortly. The commercial space is being leased out to the New Zealand government for its Ministry of Foreign Affairs and Trade (MFAT).

The total project cost is around NZ$250 million, with the development expected to be completed in Q3 2025.

Stock update

On 20 December 2022, the stock was down 1.50% at NZ$1.315 at the time of writing.