1 Aug 2016

Govt offices set for $213m upgrade

1:52 pm on 1 August 2016

Precinct Properties is going to spend another $213 million to redevelop Wellington's Bowen Campus, after the government signed long-term lease agreements.

The refurbishment will include an upgrade to the Bowen State house.

The refurbishment will include an upgrade to the Bowen State house. Photo: Google Maps

The Bowen Campus is a collection of large office buildings next to the Beehive and includes the Bowen Campus, Pastoral House, Mayfair Place, and Number 1 and Number 3 The Terrace.

Precinct said it was the largest leasing arrangement it had ever undertaken and lifted the weighted average leasing term of the Bowen Campus to 14.6 years, more than doubling the average for its total portfolio to nearly 7.4 years from 3 years.

Precinct chief executive Scott Pritchard said the fresh investment brought the total investment in Bowen Campus to $380m, and would generate a blended yield of 7 percent.

"This is the largest leasing transaction ever undertaken by Precinct, and potentially in the New Zealand office market, and represents the successful conclusion of three years of complex negotiations," he said.

Precinct also secured a fixed-price construction contract with LT McGuinness, which would be completing the work at Bowen Campus.

Mr Pritchard said the project would be funded from cash and debt.

With the company's other projects, including new office and retail projects at Auckland's Commercial Bay and Wynyard Quarter, its in-progress development works now totalled more than $1 billion.

"The projects will be funded through existing bank facilities and will take committed gearing to around 39 percent," he said.