A portfolio of four Auckland hotel, lodge and commercial properties, three of which are occupied by award-winning tour and accommodation provider Haka Tourism Group on ten-year leases, are up for sale.
Three of the properties are located on the Karangahape Rd ridge and one in Newmarket. They are being put up for sale by Auckland property developer and investor Andy Davies best known for his Ponsonby Central development.
The offering comprises a new Haka Hotel opened early this year at 9 Manukau Rd, Newmarket, the Haka Backpackers’ Lodge at 373 Karangahape Rd, an adjoining multi-tenanted three-level commercial building at 375 Karangahape Rd and another recently completed Haka Hotel at the rear of these two buildings at 2 Day St.
The portfolio is currently generating total annual rental income of $1.813 million, with future agreed stepped rental increases to approximately $2.23 million.
Bayleys Real Estate has been appointed to sell the properties by international tender, closing at 4pm Thursday November 1, unless all or any of the properties are sold prior. Tenders can be lodged for the entire portfolio or for one or more individual properties.
The properties are being marketed through Nick Thompson, Bayleys’ director – hotels and tourism; international sales director James Chan; and Damien Bullick, senior commercial broker with Bayleys’ Auckland city & fringe division.
Andy Davies’ association with the Haka Tourism Group dates back to 2015 when he refurbished and seismically strengthened a vacant character building which he owned at 373 Karangahape Rd for their Haka Lodge accommodation chain. The Haka Lodge Group, which targets the upper end of the backpacker market, was established in 2010 and also has premises in Paihia, Taupo, Christchurch and Queenstown.
Davies then developed a new 11-storey building (leased and operating as Haka Suites Hotel) on his property at 2 Day St and also fully refurbished his 9 Manukau Road property for hotel use and leased this to the Haka Tourism Group for a second hotel. Originally it was a five-level office building developed in the 1970s and later converted to residential accommodation.
Nick Thompson says the development of the Haka Hotel brand follows on from and complements the success of sister brands Haka Tours, which specialises in individually customised small group tours, and Haka Lodges.
“Their focus is on the three and four star sector of the hotel market where there is plenty of opportunity to improve traveller experiences and they are looking to establish eight more hotels around the country in the next five years.
“Their aim is to provide well priced, quality hotel accommodation based on personalised service, contemporary designs and furnishings and innovative technology. The two Haka hotels that are already operating have received a very positive response from the market, with a high level of favourable online reviews.”
The Haka Tourism Group is a group of private companies owned by The Sanders Whānau Trust, and was established in 2007 by Ryan Sanders who quit his corporate job with the Royal Bank of Scotland to establish Haka Tours.
Today, the Haka group incorporates nine separate businesses, employs over 150 people and is one of New Zealand’s fastest growing and most awarded tourism operators. It picked up four major honours at the 2017 New Zealand Tourism Awards, including the prestigious Air New Zealand Supreme Tourism Award as well as business excellence and marketing awards.
Ryan Sanders, the director of the companies in the Haka Group, also won the Tourism Champion Award for his "visionary and influential leadership” at the NZ Tourism Awards, and was also named as Canterbury’s Emerging Leader at the Westpac Canterbury 2018 Business Awards. The Haka Group has also been announced as finalists in the customer service and marketing awards categories for Westpac’s 2018 Auckland Business Awards.
“The Haka Group is now an internationally recognised force in tourism,” says Thompson. “In the last three years the group has grown at an average of 60 per cent year on year and since 2010 Haka have won over 30 awards in a wide range of categories.”
James Chan says an attractive feature of the Haka hotel leases for investors is their annual fixed rental increases.
“There are stepped annual increases in the first four years of the Day Street and Manukau Rd leases which takes into account the fact that in the early years of their operation, hotels have higher outgoings and need time to build up occupancy rates. After that there will be two-yearly CPI adjustments.”
The properties for sale are:
2 Day St: Haka Hotel
The largest of the properties on offer is the 3255 sq m 63 suite Haka Hotel, located just off Karangahape Rd, which opened in late 2017.
Damien Bullick says the building has become something of a night time central Auckland landmark because of its distinctive, multi coloured patch work of lighting and its high profile position overlooking the motorway network on the Karangahape Rd ridge line.
Located on an elevated City Centre zoned site of approximately 315 sq m, the high rise 4-star hotel offers guests unobstructed, wide ranging Harbour Bridge, harbour and CBD views with a mix of studio, one and two bedroom suites.
The property is currently generating net annual rental income of $840,000 plus GST which will increase through fixed annual rental increases to $1,080,000 plus GST from October 2020. The initial 10-year lease runs until October 2027 with three 10-year rights of renewal, which if exercised would take the final expiry through until October 2057.
373 Karangahape Rd, Haka Lodge
Adjoining the Haka Hotel on a high profile site of approximately 232 sq m on the corner of Karangahape Rd and Day St, this 805 sq m character building is fully leased to Haka for use as a backpackers lodge offering a mix of upmarket dormitory rooms, private rooms with ensuites, and a quad room. Common facilities including a fully equipped kitchen, large lounge and movie room and free unlimited Wi-Fi.
The property is well located for public transport links, with K Rd’s main bus hub close by, and is within walking distance of central Auckland’s many visitor attractions.
This property is currently generating annual rental income of $165,000 (plus GST) with fixed rental increase provisions to $190,000 (plus GST) in June 2022. Its current 10-year lease runs until June 2025 with two further 10-year rights of renewal.
375 Karangahape Rd
Adjoining both 373 Karangahape Rd and 2 Day St, this 543 sq m commercial building on an approximately 224 sq m site was fully refurbished and seismically strengthened by Andy Davies in 2014.
Bullick says it is occupied by highly rated Italian restaurant Cotto, which leases the ground level, the Anthology lounge bar and live music venue which occupies the basement level and has character office accommodation on Level One leased to three tenants.
The property’s various leases are returning annual rental of $229,600 plus GST, including income from signage leases.
“As a result of their refurbishments, both of the K Rd buildings have good seismic ratings which is a rarity in this precinct for older buildings,” says Bullick. “All three adjoining properties benefit from being close to the corner of K Rd and Ponsonby Rd and both streets’ eateries and bars, along with their vibrant mix of retail stores and entertainment venues. The location also offers easy access to the CBD as well as being conveniently located to motorways.”
9 Manukau Rd, Haka Hotel
This 1725 sq m building located on an 1103 sq m freehold site with a flexible Mixed Use zoning underwent a major refurbishment and conversion in 2017 to enable it to be leased for use as a 3-star hotel and lodge offering 63 rooms, including a manager’s suite, plus on-site car parking.
The 10-year lease to a Haka Hotel Group company runs until December 2027, with three 10- year rights of renewal. The property’s current annual rent is $578,596 plus GST, including income from two telecommunications leases, however will increase to a minimum of $738,596 plus GST by December 2020.
Chan says the property is situated close to the border of Epsom and Newmarket, at the northern end of Manukau Rd, a main thoroughfare road which runs from Newmarket through to Royal Oak. “The property is a short walk from central Newmarket and the Broadway shopping precinct, as well as providing easy access to both the CBD and Auckland airport so it is well positioned for a hotel.”