CentrePort sees BNZ and Statistics NZ buildings empty until at least 2020

Friday, 1 September 2017

The partial collapse of Statistics House prompted a government inquiry into its performance, and other buildings around the capital. Its future is now desribed as 'up in the air'.

Two of CentrePort's three major commercial properties are expected to remain empty until at least mid-2020.

The release of the statement of intent of WRC Holdings - a group of commercial or semi commercial assets of the Greater Wellington Regional Council (GWRC) - forecasts zero rental income from BNZ Harbour Quays and Statistics House until some time after mid-2020.

Customs House, the headquarters of the New Zealand Customs Service. Although the government agency suggested in April that it would be back in the building at the start of May, CentrePort now say its hopes to have the building occupied by the end of the year.

CentrePort, majority owned by GWRC, confirmed it made the assumption the buildings would be unoccupied, and not repaired, until at least that date.

While a number of buildings in central Wellington were damaged during the Kairkoura Earthquake in the early hours of November 14, Statistics House became a focus after one of the floors partially collapsed.

BNZ's Harbour Quays building, its former Wellington headquarters. In the wake of the November earthquake the bank suggested it could be back in the building within days.

* CentrePort warned of 'critical issue' in Statistics House in 2013

* Stats NZ boss: I'm asking the same questions that you're asking about our headquarters

* OPINION: Centreport owes Wellington answers about the risk of its buildings

* Damaged buildings, liquefaction, prompts Centreport to halt operations

* Statistics NZ paying 'astronomical' rent for post-earthquake offices**

An investigation into recently completed buildings, focusing on Statistics House, prompted changes to the building code.

CentrePort said the future of the building was uncertain.

'We don't see the repairs, being in a position to repair ot reinstate that building, within the SOI [statement of intent] period,' CentrePort finance director Kieran Sweetman said.

Asked whether the company ever saw the building being repaired, Sweetman: 'It's up in the air, because we're still working with our insurers with respect to the claim.'

The BNZ building, which also faced a lengthy closure after the 2013 earthquake, was in a similar position.

'It's [a] similar position to Stats [Statistics House],' Sweetman said.

'Again, we're uncertain. We're still working with our engineers in assessing the damage.'

It was unclear when the assessments would be completed, while the insurers of the building were also completing assessments.

While the future appears brighter for Customs House, the headquarters of the New Zealand Customs Service, the building will be closed for months more, with CentrePort 'hoping' repairs to the building will be completed by Christmas.

'The contractors in doing the repairs now. They can't get back in until the repair works are completed,' Sweetman said.

In the short term, CentrePort is somewhat insulated from the cost of the earthquake by its insurance.

The WRC SOI reveals the company expects to spend $340 million on earthquake repairs, only half of which will be spent in the three years covered by the document.

As well as repairs, CentrePort's insurance covers business interruption and loss of rents for up to three years.

Although the document implies repairs will only be half completed when the disruption insurance ends, chief executive Derek Nind said outside of the commercial property operations, the port should be able to operate effectively by that time.

'Beyond the indemnity period we don't think there'll be major disruption. There'll be disruption, but we think we will be able to work around it.'

The company has also warned shareholders, which also include Horizons, the regional council for Manawatu-Whanganui, that dividends are likely to be suspended until after 2020.

Sweetman said the position on dividends would be reviewed annually.

'In the meantime we decided we would take a conservative position and assume no dividend, simply because the spend over the SOI period is uncertain and will be large.'