Smaller Wellington properties snapped up

Last updated 10:00 05/05/2012

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Commercial Property

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Fierce bidding by investors looking for well tenanted properties saw four properties sell quickly in Bayley's latest commercial property auction.

The top price at Thursday's auction was paid for a Newtown building leased by Westpac Bank, which went for $1 million.

The building at 117 Riddiford St, which was owned by the Auckland-based Ranchod Group, has been leased by Westpac since 2005. The bank has a six-year lease until July 2017 with three further three-year rights of renewal, with a net annual rent of $75,000.

There were 25 bids before it finally sold for a price that represented a yield of 7.5 per cent.

A modern 550 square metre Petone warehouse, offered for sale and lease back by Premier Roofing, was hotly contested with about 12 bidders posting 38 bids before it was finally sold for $871,000.

Premier Roofing has a nine- year lease on the property at 38 Victoria St – across the road from McDonald's and the entrance to the Petone Pak 'n Save – and is paying an annual rent of $59,000.

The auction price, over $200,000 above its $670,000 rating value, represents a passing yield of 6.77 per cent.

A two-storey retail and office block at 110 Rimu Rd, Paraparaumu – which was put up for sale following the death of local builder Roger Smith, who built it 30 years ago – sold for $880,000, well under its $1.3m rating value.

There were 18 bids on the 770sqm property. Tenants, including a chiropractor, a doctor and Tile Trends, pay a combined annual rent of $59,000 although agents say the potential rent could rise to $81,000 if the property was fully leased.

The sale price represented a passing yield of 6.27 per cent.

A 180sqm office and workshop unit in McCormack Pl, Ngauranga, which is leased by Rocket Rentals for $38,340 per year, sold for $510,000 – a passing yield of 7.52 per cent.

Brisk bidding at the auction, which was attended by 120 people, contrasted with other sales in the past year where many properties have been passed in after struggling to fetch their reserve.

Bayleys Wellington director Mark Hourigan said it showed there was strong investor interest in smaller quality investment properties with good lease terms and strong tenants.

There was less interest in vacant buildings and where there were earthquake issues, but the level of inquiry was very strong for the four properties that were in this auction, he said.

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- The Dominion Post


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