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Speaker 1: Jeremy Hutton, Milford Asset Managements with us.

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Speaker 2: Now, hey, Jerremy, evening, Heather.

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Speaker 1: So Precinct Properties, we had them reporting today They've got

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Speaker 1: some exciting building projects on the go, aren't they.

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Speaker 2: Yeah, that's right. So Precinct is a large listed real

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Speaker 2: estate company on the inside X and they've been very

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Speaker 2: active in some high profile property developments over the past

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Speaker 2: few years, such as Commercial Bay and Number one Queen Street.

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Speaker 2: And they do have another future project on the books,

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Speaker 2: and this is the downtown car Park site in Auckland

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Speaker 2: and it will be no exception to high profile as well.

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Speaker 2: So Precinct related that they'd had a development agreement sorted

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Speaker 2: today on that and then also had submitted a resource

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Speaker 2: content too, So potentially another large prime office building and

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Speaker 2: another large tower block up in the Auckland skyline.

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Speaker 1: Cool stuff. Hey, on that downtown car park site, have

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Speaker 1: they already got a large tenant lined up?

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Speaker 2: Yeah? They did mention that they are in exclusive negotiations

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Speaker 2: for another major occupier for forty percent of the office

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Speaker 2: space in that building. And this is there even though

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Speaker 2: it won't be finished until after twenty thirty. So highlights

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Speaker 2: to me the continued demand for prime office space from

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Speaker 2: tenants in Auckland. But the challenge for me from here

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Speaker 2: will be the funding side of this build. Investor demands

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Speaker 2: to fund office has been pretty weak globally and this

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Speaker 2: is due to some of the low office occupancy rates

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Speaker 2: post COVID, but prime New Zealand office has actually performed

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Speaker 2: pretty strongly. But the sentiment remains a week for officer investors,

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Speaker 2: so potentially they might not contribute to this one.

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Speaker 1: Jeremy, would it be fair to say that Precinct is

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Speaker 1: seeing better returns from the residential developments then.

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Speaker 2: From office, Yeah, one could say that. I mean Precinct

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Speaker 2: has got a very solid residential development strategy as well.

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Speaker 2: They've been targeting mid to high end departments and key

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Speaker 2: locations like Parnell, Auckland Domain and Dominion Road. And they're

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Speaker 2: also venturing into student accommodation in central Auckland as well,

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Speaker 2: and today announced that they have found a capital partner

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Speaker 2: to help with that project on Quin Street, So one

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Speaker 2: could take that as a strong endorsement for that strategy.

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Speaker 2: And then just the final point, the listed real estate

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Speaker 2: companies are in an interesting space right now. They're on

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Speaker 2: It's traditionally one of the most interest rates sensitive sectors

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Speaker 2: out there, and given the LBNZ it's fairly dubbish pivot recently,

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Speaker 2: some of those headwinds from interest rates that their face

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Speaker 2: over the past few years could be turning around into

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Speaker 2: a tailwind.

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Speaker 1: Now on anyw Zealand, what are you expecting for tomorrow?

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Speaker 2: Yeah, it's fair to say in New Zealand will report

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Speaker 2: a fairly challenging result tomorrow for its twenty twenty four

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Speaker 2: financial year. And to be honest, they've been hit from

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Speaker 2: all angles recently. The plane engine issues in particular impacting

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Speaker 2: the number of planes that they can fly, so this

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Speaker 2: has reduced volume, which is a key metric. And then

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Speaker 2: there's also been an intense competition, particularly on the North

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Speaker 2: American routes as well. And at the same time, as

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Speaker 2: we know, flying or traveling is discretionary and the consumer

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Speaker 2: demand has fallen away post the post COVID travel booms.

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Speaker 2: So the outlook twenty twenty five will be interesting. I

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Speaker 2: suspect it will be pretty downbeat stall with only really

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Speaker 2: there and pot costs for jet fuel having moved in

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Speaker 2: there in the airline's direction over the past few months.

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Speaker 1: Tell you what jeremy interesting times really appreciate your time.

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Speaker 1: That's Jeremy Hatton of Milford Asset Management. For more from

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