Serepisos' Petone office block for sale

The last big building in Terry Serepisos' property portfolio has finally gone on the market three years after he was declared bankrupt.

The eight-storey IBM House and surrounding buildings on the Petone waterfront are being sold on the instructions of Grant Thornton receivership specialist David Ruscoe.

The office block was one of Serepisos's last ambitious developments.

It was financially troubled even before it was completed by Century City Ventures in 2009 as Serepisos was only able to find tenants for about three floors.

Ruscoe was appointed receiver and manager of the company in September 2011 and has spent the past three years securing other tenants to maximise the property's value on behalf of creditors.

He has been largely successful and Ruscoe said he was close to securing a tenant for the last vacant floor.

Ruscoe said he had decided to sell the building now as "we've taken it as far as we can".

The property has a 2013 rating valuation of $21.25m - with the land valued at $4.7m and improvements at $16.5m.

Neighbouring Century City Ventures buildings at 15 Victoria St, which are about to be marketed separately, have a rating value of $15,375,000.

The combined valuations of around $36.6m come to less than half the $77m advanced to Century City Ventures by financiers and sales are unlikely to cover the first mortgage.

Ruscoe said the first secured creditor, NZ Property Finance Partners (which took over loans advanced by BOS International) had outstanding claims for $55.3m

The second secured creditor, the failed South Canterbury Finance, has outstanding claims of $18.25m.

CBRE managing director Ryan Johnson, who is handling the sale, said it was the Wellington region's only suburban premium office tower and one of only a few office buildings in the Hutt Valley with a floor plate of over 1000sqm.

"This is a unique proposition for potential buyers - a wonderful long-term strategic opportunity that will suit developers and investors alike."

A recent rezoning of Petone would increase development in the area and should have a positive effect.

IBM House is on a 1.38-hectare Victoria St site, midway between the Jackson St retail precinct and the Petone foreshore.

A preliminary seismic assessment showed the building was over 100 per cent of new building standard. It had eight levels of four Green Star-equivalent office accommodation and there were 250 car parks.

With typical floor plates of 1360sqm, the total net lettable area of the building is 9735sqm.

At present 79 per cent of that was leased with a weighted average lease expiry of 4.2 years.

CBRE agent John McKenzie said IBM provided 47 per cent of the building's income. The company shifted its offices into the building when it was completed in 2009 and has an option next year to renew its lease to 2021.

Other tenants include Steel & Tube, engineering consultancy Cardno BTO and the Greater Wellington Regional Council.

When fully leased, the building had the potential to return a net annual income of $2.4m, said McKenzie.

It is being sold by deadline private treaty closing on July 8.

The Dominion Post