Latest / Best of Business / Jeremy Hutton: Milford Asset Management Equities Analyst on Air New Zealand's financial year results

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Jeremy Hutton: Milford Asset Management Equities Analyst on Air New Zealand's financial year results · Best of Business

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  Speaker 2: Jeremy harton Milford Asset Managements with us Now, Hey, Jerremy, Evening, Heather,
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  Speaker 2: So Precinct Properties, we had them reporting today. They've got
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  Speaker 2: some exciting building projects on the go, aren't they.
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  Speaker 3: Yeah, that's right. So Precinct is a large listed real
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  Speaker 3: estate company on the Inside X and they've been very
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  Speaker 3: active in some high profile property developments over the past
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  Speaker 3: few years, such as Commercial Bay and Number one Queen Street.
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  Speaker 3: And they do have another future project on the books,
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  Speaker 3: and this is the downtown car Park site in Auckland
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  Speaker 3: and it will be no exception to high profile as well.
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  Speaker 3: So Precinct related that they'd had a development agreement sorted
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  Speaker 3: today on that and then also had submitted a resource
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  Speaker 3: content too, So potentially another large prime office building and
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  Speaker 3: another large tower block up in the Auckland skyline.
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  Speaker 2: Cool stuff. Hey, on that downtown car park site. Have
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  Speaker 2: they already got a large ten lined up?
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  Speaker 3: Yeah. They did mention that there are in exclusive negotiations
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  Speaker 3: for another major occupier for forty percent of the office
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  Speaker 3: space in that building and this is there even though
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  Speaker 3: it won't be finished until after twenty thirty, so highlights
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  Speaker 3: to me the continued demand for prime office space from
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  Speaker 3: tenants in Auckland. But the challenge for me from here
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  Speaker 3: will be the funding side of this build. Investor demands
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  Speaker 3: to fund office has been pretty weak globally and this
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  Speaker 3: is due to some of the low office occupancy rates
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  Speaker 3: post COVID, but prime New Zealand office has actually performed
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  Speaker 3: pretty strongly. But the sentiment remains a week for officer investors,
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  Speaker 3: so potentially they might not contribute to this one.
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  Speaker 2: Jeremy, would it be fair to say that Precinct has
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  Speaker 2: seeing better returns from the residential developments then from.
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  Speaker 3: Office, Yeah, one could say that. I mean, Precinct has
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  Speaker 3: got a very solid residential development strategy as well. They've
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  Speaker 3: been targeting mid to high end departments and key locations
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  Speaker 3: like Parnell, Auckland, Domain and Dominion Roads, and they're also
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  Speaker 3: venturing into student accommodation in central Auckland as well. And
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  Speaker 3: today they announced that they have found a capital partner
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  Speaker 3: to help with that project on Queen Street, So one
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  Speaker 3: could take that as a strong endorsement for that strategy.
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  Speaker 3: And then just the final point. The listed real estate
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  Speaker 3: companies are in an interesting space right now. They're on
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  Speaker 3: the it's traditionally one of the most interest rates sensitive
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  Speaker 3: sectors out there, and given the RBNZ it's fairly dubbish
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  Speaker 3: pivot recently, some of those headwinds from interest rates that
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  Speaker 3: their face over the past few years could be turning
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  Speaker 3: around into a tailwind.
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  Speaker 2: Now on any New Zealand, what are you expecting for tomorrow?
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  Speaker 3: Yeah, it's fair to say in New Zealand will report
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  Speaker 3: a fairly challenging result tomorrow for its twenty twenty four
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  Speaker 3: financial year. And to be honest, they've been hit from
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  Speaker 3: all angles recently, the plane engine issues in particular impacting
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  Speaker 3: the number of planes that they can fly. This is
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  Speaker 3: reduced volume, which is a key metric. And then there's
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  Speaker 3: also been an intense competition, particularly on the North American
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  Speaker 3: routes as well. And at the same time, as we know,
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  Speaker 3: flying or traveling is discretionary and the consumer demand has
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  Speaker 3: fallen away post the post COVID travel booms. So the
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  Speaker 3: outlook twenty twenty five will be interesting. I suspect it'll
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  Speaker 3: be pretty downbeat stall with only really there and pot
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  Speaker 3: costs for jet fuel. Having moved in there in the
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  Speaker 3: airlines direction over the past few months, tell you.
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  Speaker 2: What Jeremy interesting times really appreciate your time. That's Jeremy
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  Speaker 2: Hatton of Milford Asset Management.
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