Published 30 April 2012
Kiwi Income Property Trust’s manager said on Friday it had entered into an unconditional contract to sell the newly renamed Beca House at 21 Pitt St, which was the headquarters of the Auckland Regional Council.
Kiwi Income Properties Ltd chief executive Chris Gudgeon started the week telling clients in the trust’s newsletter it had completed the $5 million makeover of the building and that engineering consultancy Beca Ltd had taken naming rights and would progressively take up residence. Beca Corporate Holdings signed a 9-year lease agreement over 14,400m² of its 16,800m² of office space in 2010. The 10-level Beca House was built in 1990 and acquired by the trust in 1997 for $32.2 million.
Mr Gudgeon said: “The sale price of $55 million represents a 2% premium to the asset’s 31 March 2012 valuation of $54 million and reflects an initial yield of 8.0%. Settlement is due to occur on 2 July. The purchaser is a private investor and the sale was brokered by CB Richard Ellis.
“This sale is consistent with our strategy of recycling capital out of mature assets to maintain balance sheet flexibility.”
Mr Gudgeon said the trust’s net bank debt gearing ratio was about 34% at 31 March. “The net sale proceeds from the sale of Beca House and the settlement of the PricewaterhouseCoopers Centre (Christchurch) insurance claim will be used to retire bank debt, reducing the trust’s net bank debt gearing ratio by about 4%.”
CBRE agent Warren Hutt, who negotiated the off-market sale, said it was the city’s largest single office transaction in 2 years. He said the buyer was a New Zealand-based private investor.
Mr Hutt said the deal signalled renewed interest in the New Zealand commercial market from local investors, with particularly strong demand for opportunities in the Auckland cbd.
“While investors are continuing to monitor the ongoing Eurozone debt crisis, the outlook for the domestic economy remains reasonably positive.
“New Zealand interest rates remain low and the major banks are continuing to be relatively aggressive in lending for property acquisitions, which has ensured that the current market sentiment remains upbeat. This has been underpinned by the positive outlook for the Auckland office market, given a lack of new supply and the continued decline in the cbd vacancy rate.”
Mr Hutt said CBRE was fielding buyer interest from a mix of domestic & offshore investors, with European, Hong Kong & other Asian buyers continuing to seek opportunities in New Zealand.
“We’re also seeing strong interest from select European funds for assets priced in the vicinity of $60 million, while Australian funds & other investors remain net sellers.”
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Attribution: Company & agency releases, story written by Bob Dey for the Bob Dey Property Report.