A significant portfolio of ground leases for the land underlying 20 residential properties in two popular Wellington suburbs are for sale, as the long-time owner entity divests some of its real estate assets.

The ground lessor’s interest in properties primarily located in Newlands, along with two in Karori, have been bundled into three lots which can be sold individually, in combination, or as a whole portfolio which widens the net for a range of investors.

Each residential property has a 14-year perpetually renewable lease to the ground lessor, with varying renewal dates, and the complete portfolio has a combined income of $560,250 per annum.

The lessees of the dwellings on the land own the improvements and are responsible for all maintenance and outgoings on those improvements, along with expenses such as rates and insurances.

Describing this as the ultimate passive investment, agents Andrew Smith and Mark Sherlock of Bayleys Wellington Commercial have been appointed by vendors Manchester Unity, New Zealand’s oldest and largest fraternal friendly society, to sell the ground leases.

Smith says this is one of the more unusual sales to be tasked with, but the value proposition for a hands-off investor is compelling.

“Owning just the land itself and having no responsibility for the built assets on it, means an owner can literally sit back and collect the ground rent.

“Given generally rising land values, there is potential upside to be unlocked over time as the ground leases incrementally come up for renewal through that 14-year perpetually renewable lease cycle.”

There is also potential to offer the individual land titles back to the owners of the residential dwellings as a freehold proposition.

Parcel 1 comprises 3,904sqm of residential land with a single lease to Wellington City Council at a rental of $305,000 per annum, with the 14-year ground lease having a renewal date of 2036. There are 33 individual flats spread across five residential multi-unit blocks on a site adjacent to the Newlands commercial centre

The second parcel is made up of 10 residential properties in Newlands, being a mix of residential homes and multi-unit properties, with individual rents ranging from $8,250 to $30,000 per annum, and lease renewals from 2029 to 2035. These properties were mainly developed in the 1960s and 1970s.

Parcel 3 is a total of nine residential properties; two in Karori and seven in Newlands. These are also a mix of standalone homes and multi-unit properties developed during the 1960s and 1970s, with individual rents ranging from $8,250 to $27,500 per annum, and lease renewals from 2024 to 2037.

The portfolio of ground leases is for sale by tender, closing Wednesday 4th December through Bayleys, with Manchester Unity looking to release some capital from its property interests.

For over 180 years, Manchester Unity has been a member-based, family-orientated not-for-profit organisation with a proud history of helping its members. Manchester Unity was established in England in 1810, with the first New Zealand branch officially starting in 1902. This branch had its foundations in a nationwide fraternal lodge network that provided social and financial assistance to its members from the 1840s.

Click here for more information on the listing.