Kirks to sell off 'trophy' assets

HANK SCHOUTEN
Last updated 10:19 18/03/2014
Kirks building

QUAY BLOCK: Kirkcaldie & Stains hopes to raise about $50 million from the sale of the Harbour City Centre, which used to house the rival DIC department store.

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Another grand old Lambton Quay department store building is on the market.

The Harbour City Centre building, and an adjoining small old earthquake-prone office building on the block between Panama and Brandon streets, are being sold by Kirkcaldie & Stains Properties.

The block is immediately south of the Kirks store which is leased from Robt Jones Holdings.

Kirkcaldie & Stains chairman Falcon Clouston said Kirks had consolidated its retail operation back into its main Lambton Quay shop and these buildings were no longer required.

"We are not a property company. Essentially we are going back to core business which is bricks and mortar retailing coupled with an evolving online presence," said Clouston.

Parts of the Harbour City Building were occupied by Kirks until last year when it shifted its administration, buying and warehousing functions to cheaper accommodation in a refurbished warehouse in Regent St, Petone.

Clouston said a lot of money had been spent getting the Harbour City Centre up to 100 per cent of new building standard.

A former owner had put in a lot of steel bracing and Kirks, which bought the former DIC department store in 2002, had spent another $6m, most of which went on sinking new piles to bedrock deep under the building.

Contact Energy, the building's main tenant had also spent millions on further refurbishment work.

It is understood the Harbour City Centre and the adjoining smaller block were valued last year at $50 million, a figure close to the $49m which had been offered for the property by the Auckland-based Argosy Group in 2012.

Most of the value is in the fully leased Harbour City Centre building while the older and smaller adjoining block, is understood to have been assessed purely on its land value at around $6m.

Clouston said Kirks was looking to sell the properties so it could recapitalise its retail business.

It had called for tenders so it could determine a true market value but if the price did not measure up they would hold it as an investment.

Bayleys director Mark Hourigan described the properties as trophy investments.

The Harbour City Centre building was built as the DIC department store in 1928.

"It has been fully strengthened, refurbished and remodelled and is leased to NZX-listed Contact Energy as anchor tenant, with Country Road Clothing as the principal retail tenant."

It has a prominent Lambton Quay frontage and secondary frontages to Brandon and Panama streets.

The seven-storey tower has 9551 square metres of space behind its 1920s heritage facade.

It has five floors of modern open-plan office accommodation around a large atrium while the sixth floor is made up of smaller office tenancies.

The building has a net income of $3.4m with a weighted average lease term of more than seven years.

The neighbouring property, which is available separately or together with the Harbour City Centre, is described as a 1355sqm redevelopment site.

The three-level building has various smaller retail tenants on short term leases and 61 secure car parks accessed off Brandon St.

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Hourigan said it was rated as earthquake-prone by the Wellington City Council and redevelopment of the site was probably the best and highest use of this property.

"The potential exists to complete a standalone redevelopment of this site utilising the 75m height limit and optimising the two street frontages.

"It can also be viewed as an add- value proposition when combined with the adjoining Harbour City Centre."

Tenders close with Bayleys Wellington on April 16.

- The Dominion Post

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