Cuba St Deka building sold for $12m

HANK SCHOUTEN
PROPERTY REPORTER
Last updated 13:30 30/10/2012
Deka building

Willis Bond managing director Mark McGuinness has confirmed he has bought the Deka building on Cuba St for $12 million.

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A former Terry Serepisos-owned property described as one of the city's most valuable development sites has been sold for about $12 million.

Willis Bond managing director Mark McGuinness confirmed today that he had bought the former Deka property at the bottom of Cuba Mall.

He plans a major redevelopment of the 4000-square metre block that runs from the bottom of Cuba Mall and along Dixon St through to Victoria St.

He said the price was confidential but market sources report it went for about $12m.

This is $5m more than Mr Serepisos paid for it in 2002, but a lot less than he borrowed against it.

Mr McGuinness said the heritage-listed Deka was an earthquake risk and needed redevelopment.

Plans had not yet been worked out, but he expected it would include a mix of retail and office accommodation.

''We may or may not demolish the Deka building,'' he said, but whatever happened it was important the character of the area was not lost.

Only low-level development was allowed at the Cuba St corner, but council rules allowed for buildings up to 10 storeys or 40 metres towards the Victoria St end of the site.

Tenants, including the Wild Pair shoe store, Rodney Wayne hairdressing and the Penny Farthing Cycle store, had a year or more to go on their tenancies and it would realistically take 18 to 24 months to work up plans.

''We see it as a great piece of land ... it's like buying the worst house in the best street.''

The Cuba Mall area had a lot of potential and Willis Bond could be looking at other opportunities in the area, said Mr McGuinness, whose company has been involved in some of the city's largest new developments in recent years, including Chews Lane and the Clyde Quay redevelopment of the old Overseas Passenger Terminal.

The former Deka property and the neighbouring Farmers department store building were put up for sale earlier this year by receiver David Ruscoe, with tenders closing in June.

Mr Serepisos paid $7m for the Deka building in 2002 and had plans for an ambitious $60m retail and apartment block on the site.

Since his bankruptcy last year with debts of about $200m, many of his properties have been sold on the instruction of mortgagees and receivers.

The Farmers/Deka block was owned by Mr Serepisos' Century City Holdings, which owed the Bank of Scotland and South Canterbury Finance $59m, more than twice its 2009 rating value of $28m.

Colliers International agent Bill Leckie said a number of parties put in bids for the Deka and Farmers buildings.

Farmers building was still under negotiation, said Mr Leckie.

The department store building,  which also straddles the block between Cuba Mall and Victoria St, has been assessed as being more valuable than the Deka block, because it is leased to Farmers on a long-term tenancy and returning a net annual income of $1.65m a year.

Mr McGuinness said he did not bid for the Farmers building. While it also needed strengthening this was difficult when there was a long term tenancy in place.

Contact Hank Schouten
Property reporter
Email: hank.schouten@dompost.co.nz

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