Two substantial Auckland CBD property holdings – one an office building and the other a development site – have been sold for over $100 million by Bayleys.
One of the four buildings in the Spark City office complex in central Auckland was sold for $70,150,000 at a 7% yield by Paul Hain of Bayleys Auckland office. The 7,592 sq m six-level Building D, on the corner of Victoria St and Hardinge Street, is fully occupied by NZX listed Spark New Zealand Limited on a 10-year lease from June 1, 2014. Hain says Building D is a pivotal component of Spark’s head office complex as it contains a 300 person function venue and theatre for Spark’s training, staff events and briefings.
The building is part of a premium grade campus-style office development that was purpose built by Mansons TCLM Ltd for New Zealand’s largest telecommunications company – then Telecom New Zealand ¬– and completed in 2010. Three of the buildings are leased by Spark, with Television New Zealand now leasing the remaining building. A unit title subdivision of the development was completed last year which has created separate freehold unit titles for each of the four buildings which are linked by a giant central atrium. The other three buildings were sold last year by Bayleys to a mix of local and offshore buyers.
Hain says the way that Mansons TCLM has structured Spark’s lease made the properties very appealing to investors. “There is a built-in annual rent increase of three percent which amounts to a substantial lift in the revenue over the period of the lease and at the moment is significantly ahead of the inflation rate. Mansons has also provided a 10-year defects and capital expenditure warranty meaning the new owner faces no irrecoverable outgoings until at least 2024.”
Spark’s lease on Building D, which includes underground parking for 75 cars, is currently producing net annual rental income of approximately $4,920,000. The next increase, due in November this year, will increase the building’s net rent to around $5,067,000. The company has two six-year rights of renewal which, if exercised, would take the lease’s final expiry through until May 2036.
sold to a purchaser from mainland China for a confidential price in excess of $30 million through John Halstead and James Chan of Bayleys Auckland office. Chan says the purchaser is looking to take advantage of a resource consent granted in 2010, and valid until 2017, which permits a high rise commercial and or residential development with a gross floor area of up to 35,305 sq m plus just over 200 car parks.
The site contains mostly undeveloped land plus the vacant Seatrans House, which can be demolished under the resource consent, and has been leased to Wilsons Parking for a number of years. It is part of a larger block, including the Ballyntyne House and the Rose & Crown pub, that Halstead previously sold in 2007.
He says the site is an attractive one for development because it is predominantly north facing, with dual access off Gore Street, and provides the opportunity to maximize panoramic city and sea views because the adjacent Britomart precinct has height restrictions.