Wellington landmark sells for $17 million

Last updated 18:45 12/05/2012
Xero House
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XERO RATED: The strengthened and renovated 1918 vintage Xero House the former John Chambers building in Cable St, which has been sold to a private investor.

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Willis Bond has sold Xero House to an unnamed local family trust for $17.7 million.

Managing director Mark McGuinness said the sale was now unconditional and due to settle in the next month or two when property titles were sorted.

Although the identity of the new buyer should be a matter of public record in a short time, McGuinness said he was bound by a confidentiality clause.

Xero House is the former John Chambers building on the Cable St corner, which used to house Rialto Cinemas. It was bought two years ago off Donald Stott's Land Equity Group.

The building, which had been cleared of tenants to make way for a major redevelopment incorporating the former Wellington City markets site, has since undergone a major upgrade.

Willis Bond also secured major tenancies and it is now the head office of Infratil parent company HRL Morrison & Co and Xero accounting software company.

McGuinness said a third tenant, whom he could not yet name publicly, had also been secured to fill the vacant ground floor "bullnose" of the building. The property, which was put on the market in March, was advertised as returning an annual rent of $1.3m and McGuinness said the $17.7m sale price represented a passing yield of 7.7 per cent.

The property was jointly listed by Colliers International and CBRE, with tenders closing on March 27. The sale was secured by Colliers.

McGuinness said proceeds from the sale would be returned to investors who contributed $128m to Willis Bond Capital Partners for investment in the company's projects, which include the Clyde Quay apartment development of the Overseas Passenger Terminal and the Market Lane apartment block next to the Xero building.

"As we exit projects we return the capital to investors, but there was ample capital available for the company's other developments."

McGuinness was not able to indicate how much profit it had made on the Xero House development, saying it was a very complicated building project.

"We strengthened it to the equivalent of 100 per cent of the new building standard and it was quite an expensive refit."

The building had been fully let with very good tenants

Colliers director Richard Findlay said the level of interest showed the investment market for prime Wellington property was still very strong. "We believe the quality of the building's tenants, its seismic strength rating, long-term leases and guaranteed rental growth provisions were strong drawcards for potential buyers," Findlay said.

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The wedge-shaped low-rise block was built in 1918 for engineering firm John Chambers and Son in the Moderne style. While the exterior is largely unchanged the interior has been completely modernised with new services and a fitout and a design that mirrors the exterior style. The building has a net lettable area of 3314 square metres and both office floors have independent lift and stair access from Wakefield St. The tenancies have a weight average of over nine years till expiry.

Xero House is in a recently regenerated waterfront business hub. Major businesses in the area include NZX, Trade Me, Goldman Sachs JB Were and Willis Bond.

- The Dominion Post

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