Auckland Council signed a conditional agreement on Monday to sell its office building at 35 Graham St in the central city to NZX-listed Asset Plus Ltd for $58 million.
The refurbished building, sitting above Fanshawe St, has a net lettable area of 9990m², floorplates of 3000-3500m² and harbour views from the upper levels.
It’s been headquarters for council planning & consent staff, but is one of a number of buildings the council has been looking at exiting in its aim to make council services more accessible.
Planning & consent teams, and their customer service centre, will remain tenants until mid-2020, then move to Te Wharau o Tamaki Auckland House at 135 Albert St and Te Wharau o Horotiu Bledisloe House between Wellesley St & Aotea Square.
The sale condition is the approval of Asset Plus shareholders at a meeting expected to be held in the first 2 weeks of June.
The council has agreed to enter into a 2-year lease from settlement, expected to be 28 June, with no right of renewal.
Augusta group strategy is value-add investment
Asset Plus fits within the portfolio management structure of NZX-listed Augusta Capital Ltd, which owns 19.9% of Asset Plus, manages its portfolio and has a value-add investment strategy for all its portfolios.
Asset Plus chair Bruce Cotterill said the Graham St purchase price represented a 6.85% initial yield, and the property had potential for repositioning, including enlargening, at the end of the lease term.
Options included various levels of refurbishment & re-leasing of the existing floors through to the addition of a further 2-3 levels of A grade office space.
“A number of key corporate tenants have lease expiries over the coming years, which should match well with the timing for redevelopment of the property,” Mr Cotterill said. “Once refurbished, we expect the expansive floorplates & extensive views will be attractive to a number of these tenants. The Augusta team will be pursuing these potential leads immediately.”
Asset Plus will fund the acquisition through a Bank of NZ debt facility. Mr Cotterill said the acquisition would be accretive to earnings.
Council focus on accessibility
The council’s urban regeneration arm, Panuku Development Auckland, is carrying out the sale on behalf of the council.
Finance & performance committee chair Ross Clow spoke about the reasons for selling: “Our aim is to make council services more accessible to all Aucklanders, providing a contact point within 10km of where they live.
“The sale of Graham St is a big step forward in delivering this vision, as funds raised from the sale of buildings which no longer support our plans will be reinvested to create more modern facilities across the region.”
In addition, he said this move & others to come would help the council avoid an estimated $117 million maintenance cost over the next 10 years.
Council corporate property head Rod Aitken said: “The buildings we’ve identified as surplus to our future requirements would cost more to maintain in their current state than our 10-year budget allows. Selling off this part of our portfolio and reinvesting in fit-for-purpose spaces is a far better outcome for both customers & staff.”
Attribution: Asset Plus & council releases.