Precinct Properties delivered steady FY26 results marked by record leasing activity, expanded capital partnerships, and a maintained dividend guidance, while advancing key development projects including the Downtown Car Park.
- Record leasing volume of 37,850 sqm with 9.9% rental growth on new leases
- Capital partnerships grew by $800 million to $2.2 billion committed value
- Portfolio occupancy steady at 97% with lease terms extended to 7.1 years
- Completed $0.5 billion in developments including 55 Molesworth Street
- Maintained FY27 dividend guidance at 6.75 cents per security
Record Leasing Activity Highlights Operational Strength
Precinct Properties (NZX:PCT) closed FY26 with a record 37,850 square metres of leasing transactions completed across its premium office portfolio, achieving a 9.9% uplift on new office leases. Occupancy held firm at 97%, while the weighted average lease term (WALT) extended to 7.1 years, up from 6.0 years the previous year. Rent reviews across more than 156,000 square metres delivered an average uplift of 3.3%, further tightening the portfolio’s under-rented position to just 3%.
These leasing metrics underscore the ongoing demand for high-quality, amenity-rich office space in Auckland and Wellington, even amid economic volatility. Precinct’s CEO Scott Pritchard noted that businesses are gravitating back to city-centre locations, valuing premium workplaces that support talent attraction and retention.
Capital Partnerships Expansion Fuels Growth
Capital partnering remains a central pillar of Precinct’s growth strategy. FY26 saw co-invested capital partnerships swell by approximately $800 million, reaching a committed on-completion value of $2.2 billion. Key transactions included the acquisition of ASB North Wharf alongside global institutional investor GIC, and the establishment of a new $600 million 50:50 partnership in Auckland’s PwC Tower with PAG, a leading global investment firm.
These partnerships not only diversify Precinct’s capital sources but also enhance recurring fee income and co-investment returns. The PwC Tower deal, expected to settle in the first half of FY27, is particularly notable for reducing Precinct’s pro forma gearing to a lean 29% and providing balance sheet capacity for future opportunities.
Development Pipeline Advances with Landmark Completions
Precinct completed $0.5 billion in developments during FY26, including the high-profile 55 Molesworth Street office in Wellington’s government precinct. This asset boasts a 21-year WALT anchored by the Ministry of Foreign Affairs and Trade, enhancing portfolio income quality and resilience.
Construction commenced at 256 Queen Street, adding to the purpose-built student accommodation (PBSA) pipeline now totaling approximately 1,600 beds across two projects. Precinct also committed to the Pillars residential project, a boutique 20-unit luxury apartment development in Auckland’s St Mary’s Bay, marking a measured expansion into the residential sector with an incremental capital commitment of around $50 million.
Downtown Car Park Project Progresses with Resource Consent
The Downtown Car Park redevelopment, Precinct’s most significant long-term opportunity, secured resource consent under the Fast-track pathway. The project is being delivered in stages, with Stage 1 focusing on office, retail, and public spaces, supported by around 50% pre-commitment of office space from tenants outside Precinct’s portfolio.
Early Contractor Involvement (ECI) with Australian tier 1 contractor Built is underway, providing cost certainty and programme insights ahead of a Q2 CY2027 commitment decision. A dedicated board subcommittee oversees the project, ensuring disciplined governance and risk management.
Financial Results and Dividend Guidance
Precinct reported Funds from Operations (FFO) of $129.5 million or 7.31 cents per stapled security, up 3.0% on the prior year. Operating profit before indirect expenses and income tax increased 6.8% to $162.7 million. However, total comprehensive income after tax was a negative $12.6 million, impacted by a $109.7 million negative fair value movement on investment and development properties.
Net tangible assets (NTA) per security declined to $1.13 from $1.21, reflecting property revaluations and portfolio adjustments. The company maintained its full-year dividend at 6.75 cents per stapled security, representing a 92% payout ratio of FFO. The Board signalled confidence in the portfolio’s quality and the strategic initiatives underpinning medium-term earnings growth.
Sustainability and Governance Advances
Precinct improved its Global Real Estate Sustainability Benchmark (GRESB) score to 91, placing it in the top 20% globally. The company now has nine buildings rated 4 or 5 stars under the Green Star Performance scheme and continues to integrate sustainability into its core strategy, including climate-related disclosures aligned with New Zealand standards.
Governance enhancements include the appointment of Monica Yianakis as Future Director and the planned transition of external auditors from Ernst & Young to Deloitte starting FY28, reflecting a commitment to best practice oversight.
What to Watch Next
Investors will be keenly watching the Downtown Car Park project as Precinct moves toward a commitment decision in 2027, with pre-leasing progress and contractor negotiations critical to reducing development risk. The evolution of capital partnerships and the residential pipeline will also be pivotal in shaping Precinct’s growth trajectory amid an uncertain economic backdrop.
Bottom Line?
Precinct’s FY26 results demonstrate operational resilience and strategic progress, but execution risks around Downtown Car Park and market conditions will test the company’s growth ambitions in FY27.
Questions in the middle?
- Will pre-leasing momentum at Downtown Car Park translate into a timely development commitment?
- How will the residential strategy evolve amid softer market conditions and targeted boutique projects?
- What impact will ongoing economic uncertainty have on leasing spreads and property valuations in FY27?