Precinct Properties NZ Ltd & Precinct Properties Investments (PCT) H1 2025 earnings summary

Executive summary

• Premium-grade office demand and occupancy remain strong at 96%, with a weighted average lease term of 6.3 years, though A-grade and below face weak demand amid economic headwinds.

• Achieved solid rental growth, with a 22.8% spread on new office leases and 3.1% uplift from rent reviews, offsetting valuation weakness.

• Expansion into the living sector continues, with three residential projects under construction, six pipeline sites secured, and a PBSA pipeline for ~1,600 beds.

• Major events included the completion of Beca House in Wynyard Quarter, a 5% cost overrun, and the acquisition of the remaining 50% of Precinct Properties Residential Limited.

• Dividend guidance reaffirmed at 6.75cps for FY25.

Financial highlights

• Gross operating revenue rose to $134.4m, up 11% year-over-year; operating profit before indirect expenses increased 4.4% to $76.6m.

• Net profit after tax was $9.2m, down from $15.3m year-over-year, impacted by higher net interest and non-operating expenses.

• Total comprehensive income after tax was $3.2m, down from $12.9m year-over-year.

• Adjusted funds from operations (AFFO) per share was 3.23 cents, with a dividend payout ratio of 104%.

• Net tangible assets per security declined to $1.25 from $1.29 at June 2024.

Outlook and guidance

• Dividend guidance for the full year reaffirmed at 6.75cps.

• Expectation of increased transaction volumes and investment confidence as market conditions stabilize and interest rates fall.

• Focus shifting from rental growth to occupancy to lift portfolio occupancy above 96%.

• Medium-term outlook for residential and student accommodation remains positive, supported by demographic trends and lower interest rates.

• Capital commitments at period end were $176.9m, indicating ongoing development activity.