2017 Investor day presentation

PRECINCT PROPERTIES, INVESTOR DAY-Page 1
Precinct Properties New Zealand
Investor Day
November 2017

PRECINCT PROPERTIES, INVESTOR DAY-Page 2
Today we’re focussed on
■Our strategy –portfolio transformation
■Portfolio and market overview
■Hot topics
–Auckland CBD office performance
–Supplyconstraints
–Constructioncosts
–Economicrents
–Densityratios
–New Government
–Co working
■Developments
–Commercial Bay and Bowen Campus
–Future opportunities

PRECINCT PROPERTIES, INVESTOR DAY-Page 3
Section 1
Strategy

PRECINCT PROPERTIES, INVESTOR DAY-Page 4
Business and strategy overview
■Most recently reviewed in 2012, the strategy has
been continually refined since 1997 when the
company was first established
■Current strategy provides clear direction for the
Precinct team and shareholders
■May invest in other city centre real estate including
land, retail, hotels and value add properties where
profitability can be enhanced
■Ambition to control or own strategic city centre
precincts enabling us to create vibrant
environments
Precinct is a specialist city centre real estate investment company. It invests in high quality
strategically located city centre real estate.
Empowering
people
Operational
excellence
Developing the
future
Strategy focus
Principles of success
1.Concentrated ownership in
strategic locations
2.Quality client relationships
3.Investing in quality
4.A long-term view

PRECINCT PROPERTIES, INVESTOR DAY-Page 5
Achieving strategy
20122017
Dedicatedstaff1455
PropertyfunctionsOut-sourcedIn-house
Client satisfaction64%72%
Staff engagement75%78%
Empowering people
20122017
Assetage21 years11 years
QualityA-gradePremium
WALT5.9 years9.0 years
Occupancy94%100%
Maint. CAPEX0.8%0.4%
NBS Score85%94%
Operational excellence
Developing the future
20122017
Acquisitions
Bowen Campus
DowntownShopping centre
HSBC House
Queen Elizabeth Square
Regeneration
Precincts
WynyardQuarter
Bowen Campus
Commercial Bay
Development
pipeline
$0$1.2billion
%of retail4.5%18%
1
AKLWeighting50%76%
Mixed use
projects
Commercial Bay
Wynyard Quarter
Partnerships
PanukuDevelopment Auckland
Generator, ATEED
1
includes Commercial Bay retail

PRECINCT PROPERTIES, INVESTOR DAY-Page 6
■Earnings pathway maintained to 2021
■Forecast earnings growth expected to
provide CAGR of 3.5% between 2012 and
2021
■Significant quality shift occurring
contemporaneously
■Committed WALT now 9 years
Earnings pathway and quality shift
Earnings per share –Actual and pathway
Note: The graph presented above represents a hypothetical scenario only and should not
be considered a budget, plan or forecast. There is no certainty that earnings will
eventuate as illustrated.
4.5
5
5.5
6
6.5
7
7.5
FY 12FY 13FY 14FY 15FY 16FY 17FY 18FY 19FY 20FY 21
Earnings per share after tax
2014 pathway2016 pathwayCAGR
Actual EPSFY18 guidance
80%
85%
90%
95%
100%
3.00
5.00
7.00
9.00
121314151617
Occupancy
WALT
Financial Year End
OccupancyWALT
Portfolio WALT and Occupancy
Weighted average portfolio age
5 years
10 years
15 years
20 years
25 years
20122013201420152016201720182019
HistoricForecast

PRECINCT PROPERTIES, INVESTOR DAY-Page 7
Comparison to A-REITs

PRECINCT PROPERTIES, INVESTOR DAY-Page 8
Section 2
Portfolio:
Market Overview

PRECINCT PROPERTIES, INVESTOR DAY-Page 9
76 %
weighting (by value) to
Auckland (inc.developments)
9.0 years
Weighted average lease term
(incl. developments)
Portfolio overview
Key metrics
Portfolio metrics
Composition of revenue by
industry sector on completion
Lease expiry profile
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
WellingtonAuckland
Investment Portfolio
Developments on
completion
Investment
Including
Developments on
completion
Total Assets$1,535 m $1,174 m $2,709 m
% Wellington28%20%24%
WALT7.1 years 11.5 years 9.0 years
Occupancy100% 96%99%
Market Cap rate6.2% 5.6% 6.0%
NLA221,665 m² 95,600 m² 317,265 m²
5%
18%
23%
7%
32%
16%
Car Parks
Retail
New Zealand
Government
Legal
Financial Servies,
Banking and Insurance
Other

PRECINCT PROPERTIES, INVESTOR DAY-Page 10
Page 10
Auckland
Portfolio
Stanbeth
Takutai
Coming soon
Mason Brothers
12 Madden

PRECINCT PROPERTIES, INVESTOR DAY-Page 11
Auckland CBD
market
Midtown
2.7%
$365
6.9%
Core
6.0%
$485
6.2%
Britomart
0.0%
$480
6.8%
Commercial
Bay precinct
0.0%
$525
6.1%
Key:
Vacancy
Rents
Market yields

PRECINCT PROPERTIES, INVESTOR DAY-Page 12
Auckland CBD
public
investment
Map Key:
Public investment
CRL / Light Rail
Public regeneration
CommercialBay
Aotea Station
Light Rail
Light
rail
City rail
link
Ferry Basin
Redevelopment
Bus
relocation
Bus
relocation

PRECINCT PROPERTIES, INVESTOR DAY-Page 13
Map Key:
Office(potential supply)
Non office(Hotel/Other)
Public investment
CRL / Light Rail
Public regeneration
CommercialBay
Other CBD projects:
■Wynyard Quarter
■Americas cup
■Park Hyatt Hotel
■UOA Engineering
10-12 Commerce Street
$27,765,000 (November 2015)
1,388sqm / 36,700sqm (26:1)
$20,000psm
Required Average
Net Face Rent
$770psm
28 Shortland Street
$26,000,000 (April 2014)
2,010sqm / 26,000sqm (13:1)
$13,000psm
Required Average
Net Face Rent
$795psm
NZME Albert Street
(MansonsApproach)
$42m (Original purchase)
$9m cost net of divestment
3,124sqm / $2,800psm
Assuming 20,000 GFA
Net Face Rent
$670psm
Assumptions
▪Commercial Bay construction costs
escalated to 2017
▪Capitalisation rate of 6.0%
▪Return on Cost of 17.5%
▪Adopted MFAR or Consented FAR
Part NZME
Albert Street
$33,000,000
1,134sqm /
14,700sqm (13:1)
$29,000psm
1-3 Albert Street
$45,000,000
5% passing
Pacifica
57 levels,178 m
Customs Street
52 levels, 187m
NZICC
Park residence
Auckland CBD
private
investment
5-15 Albert Street
$49,000,000
2,200sqm
c.$22,000sqm
SO Hotel

PRECINCT PROPERTIES, INVESTOR DAY-Page 14
Auckland CBD office market
Office Vacancy -Colliers
CBD office employee change 2011 to 2016
20.0%
20.5%
21.0%
21.5%
22.0%
22.5%
23.0%
40,000
50,000
60,000
70,000
80,000
90,000
100,000
CBD as a % of total region
Employee Count
CBD Office based employmentCBD % of Region
-1,000
-
1,000 2,000 3,000 4,000 5,000 6,000
Media and Telco
Financial and Insurance Services
Rental, Hiring and Real Estate...
Professional Services
Administative Services
Government
Employee count
Total CBD office employment
Office net rental -Colliers

PRECINCT PROPERTIES, INVESTOR DAY-Page 15
City centre drivers
■CBD market share of regional office employment
increasing
–CBD office employment grown by 12,000 people
(18%) since 2011
■Increase in CBD public transport patronage
–City rail link and new rail stations
–Rail patronage increased 224% in the last 10 years
■Strong and growing pedestrian counts
■CBD resident population has grown 6 times faster than
the rest of the city.
■Record hotel occupancy levels due to strong tourism
sector
–Daily rates have increased 13.3% year on year
■Since 2010, annual cruise ship passengers have more
than doubled to 250,000.
–Expected to grow to 350,000 in next two seasons
45,000
Inner city residents.15
years ahead of previous
projections
+17%
Increase patronage
adjacent to
Commercial Bay
Benefiting from city centre centralisation
5,000+
5 year increase in
number of professional
service employees in
CBD office
95,000
Net migration over the
past 3 years into
Auckland

PRECINCT PROPERTIES, INVESTOR DAY-Page 16
■Auckland retail market is holding firm
–Growing population is bolstering demand for goods and services
■Vacancy rates remain tight
–Strip retail reducing to 3.3% June 2017 (4.8% 2016)
–Queen Street remained flat at 2.8%
–Strong tenant demand remains for prime retail space
■Average net face rentals have increased
1.8% over the past 12 months
–Low vacancy rates likely to keep rentals firm in prime locations
■CBD retail not expected to be materially impacted by online retail due to experiential offer and
high foot traffic
Auckland CBD retail market

PRECINCT PROPERTIES, INVESTOR DAY-Page 17
■Visitor arrivals to New Zealand are expected to grow 4.8% p.a. to 2023
–Auckland Airports international passengers were up 6.8% over the past 12 months
–Auckland Airport’s second runway to be complete by 2025
–Auckland accounts for majority of tourism spend
■Demand for hotel space is growing faster than the supply
■Auckland hotel occupancy has hit record highs of 83%
–Driving growth in average daily rate
■According to Colliers, Auckland
market requires up to 4,300 new
hotel rooms by 2025 to meet
demand.
■Based on known forecast
supply, there is a shortfall of
up to 1,800 rooms.
■Hotel income outperformed
other property sectors post
GFC.
Indexed normalised rentals across sectors
Auckland Hotel market
60
80
100
120
140
160
180
2007200820092010201120122013201420152016
Prime CBD OfficePrime CBD Retail
Regional RetailIndustrial Prime Rents
Auckland RevPAR (5-star)

PRECINCT PROPERTIES, INVESTOR DAY-Page 18
Page 18
Wellington
Portfolio
Bowen Campus
1 -3 The Terrace
Pastoral House
Mayfair House
Dimension Data
House
State Insurance
Tower
10 Brandon St
Bowen Campus
Balance Land

PRECINCT PROPERTIES, INVESTOR DAY-Page 19
BNZ Harbour
Quay
Defence
House
Molesworth
Cinema
45,000m
2
demolish*
10 Brandon
St
Asteron
Life
111,000m
2
under inspection*
Revera
House
Stats NZ
building
1 Bowen
St
■Post quake, total office stock reduced by c.100,000m
2
reducing total stock to 1.4 million m
2
–City wide vacancy fell to 7.8% (Nov 16: 10.5%)
■Majority of stock withdrawals from A grade or better
–Prime vacancy reduced to 0.1% (from c.3%)
■Wellington Council required 80 building owners to undertake invasive seismic testing which is
ongoing
Wellington market
14 November 2017 New Zealand Herald
* CBRE March Earthquake Viewpoint

PRECINCT PROPERTIES, INVESTOR DAY-Page 20
Wellington CBD office market
Office CBD vacancy -Colliers
Office gross rental -Colliers
■In the near term prime office space
will continue to be tight
■80,000m
2
currently under
construction
■Short term rental growth is
expected to slow following the
completion of new builds and
seismic refurbishments
■Supportive investment market
■Majestic Centre sold for $123
million at a 6.9% passing yield
■HSBC sold off market at 6.25%
passing
■Seismic remains a focus for
occupiers, insurers and investors

Section 3
Hot topics

PRECINCT PROPERTIES, INVESTOR DAY-Page 22
■Some emerging concerns over future
CBD office market performance due to
supply pipeline
■Underlying market drivers remain strong
–Economic strength/activity
–Employment intentions
–Public / Private spend
■Supply pipeline continues to reduce
Auckland CBD office market
Historical forecast market yields
Historical forecast net face rents

PRECINCT PROPERTIES, INVESTOR DAY-Page 23
Building cost escalation 2012-2017
$3,000/m²
$3,250/m²
$3,500/m²
$3,750/m²
$4,000/m²
$4,250/m²
$4,500/m²
New Buildi construction cost
Hot topic 1: Auckland supply outlook
■NZ non residential construction costs increased by
19% over previous 5 years
■QS pricing suggests Auckland costs have risen by
25% over the past 3-4 years
■Forecast construction cost inflation of 4.4% p.a.
through to 2021.
■Auckland building and infrastructure activity to
grow materially.
New Zealand Index
Source: RLB, Stats NZ and PCT estimates
International development feasibility comparison
Source: RLB, Colliers, Precinct estimates
$10,000 /m² $20,000 /m² $30,000 /m²
Wellington
Auckland
Perth
Brisbane
Melbourne
Sydney
New York
San Francisco
Construction CostOther (incl land & Incentives)Profit
Source: RLB International Report Q3 2017, Colliers
CBD Office H2 2017 and PCT estimates

PRECINCT PROPERTIES, INVESTOR DAY-Page 24
1: Economic rents
■Strong investment market
–Continued strength in Auckland
–Strengthening in Wellington taking
advantage of yield spread
■Auckland cap rates are below peak
levels reached in 2007
–Spread to 10 year swap rate remains
above historic average
■Number of factors supporting rental
growth
–Historically low vacancy rates
–Continued growth in CBD employee
numbers
–Lack of forecast supply
■Strong building and construction
forecast
–Forecasting peak levels to be reached
by 2020 (3 years later than previously
forecast)
Historic cap rates
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
0102030405060708091011121314151617
Cap rate
Financial Year End
PortfolioAucklandWellington10 year swap rate
All building and construction nationally, by value

PRECINCT PROPERTIES, INVESTOR DAY-Page 25
1:Economic rents (188 Quay St example)
■Land and buildings rates now above
peak levels (10 years later)
■Market rental levels remain below
peak
–17% below 2008 peak inflation adj.
levels (5% below nominal)
For a new tower to be feasible
i.e. Market effective = to economic rents
■Market rents need to increase
–Currently 14% below economic
rents
or
■Land and building rates need to
decrease
–Land value falls by 40% (to pre
2012 levels), or
–Construction costs fall by 19% (to
pre 2015 levels)
PWC land and building rates (psm)
PWC average tower rent (psm)
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$300 /m²
$400 /m²
$500 /m²
$600 /m²
$700 /m²
02030405060708091011121314151617
PwC Tower Market RentCompletion rent inflation adj.
PwC Tower Economic rent2008 peak inflation adj.

PRECINCT PROPERTIES, INVESTOR DAY-Page 26
■While market rents are close to 2008 high
total occupancy costs are 15% lower
■Based on JLL rental and stock forecasts,
TOC per CBD employee are expected to
grow by1.2% p.a. over the next 5 years
–Below level of forecast inflation, and
–Indicates rental affordability. In 2022
rents are 9% below 2008 levels
■On floor efficiencies and improved
density. Majority of occupiers (govt and
private) have already made shift.
Hot topic 2: Density and TOC
Auckland TOC and Market NER
-
5.0
10.0
15.0
20.0
25.0
GovtPremiumA GradeB GradeC Grade
Area per office person
20102016
Auckland density –Historic and Forecast
NZ density benchmarking 2010-2016
12.0
13.0
14.0
15.0
16.0
17.0
18.0
Area per office person
PCT estimates based on JLL data (stock and vacancy) and stats NZ CBD
employment data
Colliers International and Crown Office Estate Report
Based on JLL data (stock, NER and vacancy
$100 /m²
$200 /m²
$300 /m²
$400 /m²
$500 /m²
$600 /m²
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
2003200420062007200820092010201120122013201420152016201720182019202020212022
Market NER
Total Occupancy Cost per CBD employee
Projected TOC per CBD employee (PCT)TOC per CBD employee
A Grade CBD (JLL)Forecast A Grade (JLL)

PRECINCT PROPERTIES, INVESTOR DAY-Page 27
Hot topic 3: Government impacts for Precinct
Policy DescriptionImpact on
construction
cost
Impact on
construction
capacity
Impact on
commercial
supply
Commercial
Investment
market
TaxPotential tax changes
including capital gains
tax
--
▼▼
KiwibuildCommitment to build
10,000 houses p.a. for
10 years
▲▼▼
-
Infrastructure
and transport
Commitment to
proceed on a number
of infrastructure projects
▲▼▼▲
ImmigrationReduce net
immigration
▲▼▼
-
OIO changesLimit foreign investment
--
▼▼
Minimum
Wage
Increase in minimum
wage
▲
-
▼▼

PRECINCT PROPERTIES, INVESTOR DAY-Page 28
Hot topic 3: Co-working investment
■Precinct have a 50% interest in
Generator;
–Co working
–Dedicated desks and/or small suites
–Event space
■Generator now manages 13,000m
2
across three locations
–Stanbeth
–GRID AKL Wynyard
–Takutai–Britomart (opens mid 2018)
■Generator provides businesses with
fewer employees high quality space and
service/amenity that they otherwise
couldn’t access
■Future opportunities driven by trends to
managed workplaces
■Provides pipeline of growth occupiers as
well as attractive financial returns
Factors driving growth
1.New business (startupsand new entrants)
2.Flexibility, ease and speed of setup
3.Corporate market using space as part of
real estate strategy
4.Lease accounting changes
5.Growth in Technology sector
6.Millennial workforce
Asia work population by generation

PRECINCT PROPERTIES, INVESTOR DAY-Page 29
Hot topic 3: Co-working investment
No. of co-working spaces worldwideFactors driving multinationals’ use of third party space (CBRE)
0%20%40%60%
Access to new services &
amenities
Attract and retain talent
Acquire remote office spaces
Promote networking /
collaboration
Need a short term space solution
Promote innovation
Increase leasing flexibility
Reduce costs
APAC Multinationals’ current and planned use of third party space (CBRE)
0%
10%
20%
30%
40%
50%
60%
70%
OverallServiced officesCo-working
space
Innovation
Centre
Business
incubator /
accelerator
% of respondents
CurrentPlanned (By 2020)
Co-working market forecast
to grow by 51% (by area)
by 2018

Section 4
Developments

PRECINCT PROPERTIES, INVESTOR DAY-Page 31
Development Summary
Key development metrics20172016
DevelopmentPipeline$0.9 b$1.0 b
Totaldevelopment NLA96,825 sqm 109,827 sqm
Total office NLA76,397sqm89,542 sqm
Office leasedto date61,279 sqm 66,131 sqm
% of office leased80% 74%
% of total NLA leased70%64%
WALT committed to date13.2 years 13.1 years
Value on Completion$1,174 m $1,140 m
Weighting to Auckland80%80%
7.5%
Blended yield on cost
27%
Blended return on cost
70%
Pre-leased by NLA on office and retail
$160m
Un-recognised development profit
Strong occupier covenant (of leased market rental)

PRECINCT PROPERTIES, INVESTOR DAY-Page 32
Commercial Bay
CommencementCurrentChange
Retail Pre-committed0%46%46%
Office Pre-committed52%66%14%
Total project cost$681m$685 m$4 m
Value onCompletion$853 m$941 m$88 m
Return on cost19.4%31.0%11.6%
■Value on completion of $941million
■$213m expected profit on
completion
■46%of retail space committed
■66% of office space committed
■Retail launch phased with two stage
opening
–c. 20% opening mid 2018
–Remainder opening in Q1 2019
Financial Metrics
$213M
of expected profit

PRECINCT PROPERTIES, INVESTOR DAY-Page 33
Bowen Campus
■Crown leased the remaining 4 floors
of Bowen State building
■NZDF is approved to occupy the
Bowen State building
■MPI lead agency on Charles
Fergusson Tower
■Construction works are progressing
well
■Bowen State lease extended to 18
years
CommencementCurrentChange
Construction StartNovember2016
Expected CompletionEarly 2019
Total project cost$203m$203 m-
Value onCompletion$229 m$233 m*$4 m
Return on cost13%15%2%
Financial Metrics
100%
Leased
*Excluding the benefit of 100% occupancy and 18 year lease

PRECINCT PROPERTIES, INVESTOR DAY-Page 34
Bowen Campus
■100% leased
■Bowen Campus WALT increased to
16.9 years (June 17: 15 years)
■Wellington portfolio WALT
increased to 11.2 years
■Annexcurrently being demolished
Remaining RFP assets
■No.3 The Terrace commencing as
planned in May 2018
■MayfairHouse works are expected
to start mid 2019 coinciding with
the completion of No. 3 The
Terrace
■PastoralHouse redevelopment
commencement date shifted to
December 2018
Wellington RFP update

Section 5
Future
Developments

PRECINCT PROPERTIES, INVESTOR DAY-Page 36
1 Queen
1 Queen
2019 +
Expected project start
$160 million
Estimated incremental
project spend
Office or
Mixed use
Proposed use

PRECINCT PROPERTIES, INVESTOR DAY-Page 37
■Discussions on-going with
preferred hotel operator
■Likely mixed use
–Hotel with office above
■Supports Commercial Bay
retail
–Particularly food and
beverage
1 Queen

PRECINCT PROPERTIES, INVESTOR DAY-Page 38
Wynyard Quarter
2020 +
Expected project start
$150 million
Estimated incremental
project spend
Office
Proposed use
■3 remaining sites
■c.30,000sqm of GFA to be developed
■In discussion with occupiers for stage 2 (site 5b)
■Target to commit Stage 2 within the next 6-12
months
■Timing determined by:
–Strength of occupier market (supply)
–Growth of Innovation Precinct (future
stages)
2018 +
Expected project start
$60 million
Estimated incremental
project spend
Office
Proposed use
Artist impression of Site 6
Above: Artist impression of Site 5B

PRECINCT PROPERTIES, INVESTOR DAY-Page 39
Bowen balance land
2018 +
Expected project start
$150 million
Estimated incremental
project spend
Office
Potential use

PRECINCT PROPERTIES, INVESTOR DAY-Page 40
10 Brandon Street
■A number of options for the building have been explored to
date:
–Strengthen existing
–Strengthen with façade upgrade
–Full office redevelopment
–Student accommodation
–Apartments
–Office/Apartment hybrid
■Preferred option expected to be finalised by February 2018
Full redevelopmentOffice/Apartment hybridStudent accommodation

PRECINCT PROPERTIES, INVESTOR DAY-Page 41
■Precinct has a clear strategy to provide long term outperformance
■Strategy provides certainty for:
–Investors
–Staff
–Market
■Strategy retains focus on city centre real estate
■Precinct continuing to be well positioned with supportive market
Conclusion