Serepisos tower finally filling up

HANK SCHOUTEN
Last updated 08:27 19/03/2013

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Four years after it was completed Terry Serepisos' IBM Tower in Petone could soon finally have enough tenants to make it a saleable proposition for company receiver David Ruscoe.

The eight-storey block - the only A grade office building in the Hutt Valley - was one of the last major developments to be completed before Serepisos was bankrupted in 2011.

Most of the 9000 square metres of office space has been vacant since construction was completed in 2009.

Serepisos leased two floors to IBM and half the eighth floor to Scientific Software and Systems before he was bankrupted.

The receiver was left with the job of finding tenants for the remaining 6000sqm of office space to realise the property's potential and maximise its resale value.

One 1300sqm floor was leased just before Christmas to Steel and Tube and CBRE leasing specialist Matt Hince said he was hoping to secure another tenant.

He had also heard another floor may be filled shortly.

Ruscoe, a partner in Grant Thornton, said there was good interest in the three floors that were still available and they were getting good competitive leasing rates.

In his last six-monthly report, in November, Ruscoe said the plan was to market the properties "once the leasing opportunities have been fully tested and we believe it is the best time in the market to obtain the best sale price".

Commenting last week, he said: "We're getting to the position where it is saleable and we will be looking at some stage this year to put it on the market."

Even fully tenanted, the property is unlikely to fetch anything approaching the debts secured against it.

Serepisos' Century City Ventures borrowed $76 million against the IBM complex, which includes the new office block at 25 Victoria St and the neighbouring old IBM building on the Petone Esplanade.

The 2010 rating values of the two properties was $26.6m.

The first mortgage alone, advanced by the Bank of Scotland International (Australia), was for $58m. That mortgage is now held by Brookfield NZ Finance and Brookfield RETIP Australia after BOS's troubled huge loan portfolio was bought by Goldman Sachs.

Another $18m is owed to the second secured creditor, failed South Canterbury Finance. Ruscoe advised there were unlikely to be any funds available to repay this loan.

Another former Serepisos property, the Farmers building in Cuba St, is also still under the control of the receiver.

It was put on the market last year with the adjoining former Deka building on the corner of Cuba and Dixon streets. The Deka building was sold to Willis Bond for $12m and plans are now being prepared for a redevelopment of that 4000-square-metre block.

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But the Farmers building failed to sell.

Ruscoe said Farmers had another six years to run on its lease and he was looking at options for the property. These could include strengthening the present shop or completely redeveloping the site, which runs through to Victoria St.

The Farmers property has been assessed as being more valuable than the Deka block because its lease is returning a net annual income of $1.65m.

Ruscoe said he hoped to retain Farmers as a tenant and was looking at all the options before making it available for sale.

- The Dominion Post

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