Fund sells Papanui landmark for $6.7m
DNZ Property Fund has sold a property in the commercial centre of Papanui, Christchurch, for $6.72 million.
Settlement of the unconditional sale of the Winston Ave property is scheduled for March 28.
Shares in the listed commercial property company were trading steadily at $1.53 on light volume yesterday afternoon.
Knight Frank NZ managing director Layne Harwood said the commercial office property was sold to a Christchurch family.
The age of the building, dating back to 1992, meant it attracted interest from experienced property owners rather than pure investors, Harwood said.
"Interest was varied, probably because of the price bracket and age. If that building was new we would have sold that many times over," he said.
"It was of interest to people with a deep understanding of property . . . it needs to be worked on, upgraded, tenancies need to be managed."
The five-storey stand-alone building is one of Papanui's landmark properties. It is in a prominent position near to Northlands Mall, which is owned by Kiwi Income Property Trust.
The Winstone Ave site, near the intersection of Main North and Papanui roads, has been occupied by the Crown since 2005. It renewed a six-year term in 2011. It is fully leased to the Ministry of Social Development as its South Island regional office, and houses departments including Work and Income, and Child, Youth and Family.
The complex includes a multi- level parking building alongside.
The Crown leases have three rights of renewal of three years each.
Harwood said the net rent for the property was $681,009 a year, with a rent review agreed for 2014.
The site land area is 2742 square metres with floor area totalling 4447 square metres. The car park building has 85 spaces. The office building is at 73 per cent of new building standards and the car park at 81 per cent.
DNZ bought the Papanui property for $6.95m in 2005. The site has a rating valuation of $8.56m, of which $6.78m is land value.
The information memorandum for the property noted a significant commercial development is to be undertaken nearby in Langdons Rd, on the old Firestone site. This would comprise a mixture of bulk retail and light distribution buildings over a 9-hectare property.
DNZ Property Fund owns one of New Zealand's largest diversified investment property portfolios with $770.6m of commercial office, retail and industrial properties, as valued at September 30, 2013.
In 2012 the company sold its only other Christchurch property, a Hornby industrial building, to tenant Value Tyres for $10m.
As at December 31, DNZ Property Fund owned 47 properties with 297 tenants, located in the main urban areas throughout New Zealand.
The properties have a weighted average lease term of 5.5 years and an occupancy rate of 99.4 per cent over a net lettable area of 369,407sqm.
DNZ also holds management rights to Diversified NZ Property Fund, a $117.4m commercial property portfolio.
DNZ's top 10 tenants at September 30 were Bunnings, Progressive Enterprises (Countdown), the New Zealand Government, Foodstuffs (Pak 'n Save and New World), ASB, Fletcher Building, The Warehouse, Westpac, Meridian Energy and Lion Nathan.
These 10 tenants represent 52 per cent of the company's total contract rental.