Earthquake claim tally rises
Property company Argosy’s insurance claims have risen to just over $60 million so far for damage caused by the 2016 Kaiko¯ ura earthquake.
The claims are primarily for material damage and reinstatement works until July 31 this year at $45.3m, and claims for business interruption, mainly loss of rents, of $15m.
The company said it had received progress payments from insurers of $23.4m, after a $4.9m deductible, for its interim claims. Of that, $10.8m had been allocated to reinstatement works, $11m to loss of rents and $1.6m to expense recoveries.
Argosy updated the claims on releasing its half-year result, a 15 per cent rise in its profit after tax to $76.9m compared to $66.7m in the previous half-year. It included a $50.8m gain on the value of its properties.
Argosy said its net property income for the half year was $51m which included rental loss recoveries from insurers.
Argosy’s claims for material damage are mostly to the 14-level NZ Post building at 7 Waterloo
Quay in Wellington, where the reinstatement programme was largely complete.
The seismic strengthening work was finished and it had received certification as being 80 per cent of the New Building Standard (NBS).
The building was 82 per cent leased to Government tenants, which will take up tenancies next year. NZ Post would remain on the ground floor and relocate from the four tower floors it occupied to level 1 at the end of the year.
Other tenants were the Department of Internal Affairs, Kainga Ora (formerly Housing New Zealand), and the Ministry of Housing and Urban Development.
In May at its full-year result Argosy said it had $39.6m of claims for reinstatement up to March 31, this year, $14.2m for loss of rents and it had received progress payments of $20.9m.
Chief executive Peter Mence said there was strong interest for the remaining 3650 square metres on levels 9, 11 and 12 at Waterloo Quay.
‘‘As with many significant insurance claims for earthquake damage, there is debate with insurers over the extent of damage, the scope of repair works, the repair methodology and the extent of insurance cover.’’
To back its claims, Argosy had commissioned a comprehensive damage survey of the Waterloo Quay building, detailed damage assessment reports, and reinstatement scopes and a comprehensive reinstatement cost estimate. Argosy had submitted these to insurers and was now addressing feedback from insurers’ consultants.
The company had delivered on some key issues in the first six months of the 2020 financial year, including Waterloo Quay leasing, a $100m second green bond issue and diversification and extension of its debt, Mence said.
The $50.8m revaluation gain reflected strong rental growth, proactive management and ‘‘a generally buoyant real estate market’’. The property company’s total assets were $1.83 billion, up from $1.66b six months before.
Low interest rates were supporting property markets and Auckland and Wellington’s were ‘‘relatively buoyant’’.
Conditions were attractive for sellers and Argosy would continue to sell non-core property in the next 18 months to take advantage of that.
Company chairman Mike Smith said the focus on ‘‘greening’’ its portfolio would continue. It was very good for the company in the long term and other green developments were being considered for starting in the next 12 months.