Ground Lessor’s Interest Portfolio For Sale

Six high-profile commercial investments across the North Island which form part of one of New Zealand’s most prestigious ground lease portfolios have been placed on the market for sale.

Ground lessor’s interests are for sale for sites in key locations across Northland, North Auckland, Rotorua and Hastings. With prominent town-centre positions, they offer individual ground rent incomes ranging from about $10,000 to $60,000 per annum.

The six North Island properties are being marketed for sale individually or as a portfolio by tender closing on 17 March (unless sold prior), through Bayleys’ teams in Auckland Central and throughout the North Island.

Portfolio salespeople Damien Bullick and Alan Haydock said the sites benefited from a “hands-off” ground lessor’s interest structure, and in some cases provided potential for future upside through land value rent reviews and expiring leases.

“These properties present a rare opportunity for buyers seeking a diversified ground lease commercial portfolio spread across New Zealand’s northern regions, with a range of add-value opportunities,” said Mr Bullick. “Alternatively, buyers could consider one or more properties as an affordable passive investment with future upside.”

Buying the lessor’s interest entitles a purchaser to collect the ground rent payable on the land under the ground lease – without being required to spend on maintaining or developing the buildings or other of the lessee’s improvements.

Haydock said all of the properties for sale offer rent review mechanisms and a number have zonings allowing for intensified development. “As the ground rent is reviewed on the basis of unimproved land value, there is potential for ongoing rental growth at the rent review dates,” he said.

All of the properties for sale are underpinned by substantial lessee improvements, said Bullick.

“The considerable value of the improvements underpins the value of the ground lessor’s interests and makes a default or non-renewal of ground leases less likely.”

106a and 106b Victoria Street, Dargaville

Two lessor’s interests for sale cover neighbouring sites of approximately 187 square metres and 240 square metres respectively at 106a and 106b Victoria Street, Dargaville. These contain two high-profile shops on a main town thoroughfare and retail strip.

Bayleys salesperson John Haseldsen said the shops had been combined and are occupied by a laundry services business trading as Apparel Master, which offers commercial services to local businesses.

With some 5,000 residents, Dargaville is a service town some 55 kilometres southwest of Whangarei and two hours from Auckland. It hosts a range of local amenities, with major occupiers near the Victoria Street sites including the Warehouse and Countdown.

The properties for sale are zoned Business Commercial under the Kaipara District Plan. They are subject to separate ground leases to the same lessee and will be sold together.

These return a total of $10,550 plus GST per annum and are subject to 21-year reviews. The next review and renewal is in 2031.

126 Rodney Street, Wellsford

This approximately 1,948 square metre freehold site is prominently situated at the corner of Rodney Street and Harrison Street in Wellsford.

Salesperson Henry Napier said the lessee improvements comprise a Super Liquor retail store and adjoining Pizza restaurant on the Rodney Street frontage, plus a workshop/retail building at the rear, trading as Automotive Outdoor & Marine Limited.

Rodney Street is a main arterial road in Wellsford, a regional centre at the junction of State Highways 1 and 16, some 77 kilometres from central Auckland.

The property is zoned Business – Town Centre under Auckland’s unitary

plan. “This allows for development of up to 18 metres in height for this property with options including retail, commercial and residential,” said Napier.

The ground lease returns $35,000 plus GST per annum and is subject to a 21-year perpetually renewable term, with seven-year rent reviews. The next review and renewal is in 2024.

112 Rodney Street, Wellsford

Also prominently located on this major Wellsford thoroughfare, 112 Rodney Street is a freehold site of some 615 square metres. The lessee improvements contain a Bridgestone Tyre Centre, which offers customer-facing services on the Rodney Street frontage and workshop space at the rear.

“As with the other Rodney Street offering, this site is currently under-developed due to the allowable development provided by the Business – Town Centre zoning,” Napier said.

The ground lease returns $15,500 plus GST per annum and is subject to a 20-year perpetually renewable term, with five-year rent reviews.

The next review is in 2022 and the next renewal is in 2032. The property also benefits from a fixed annual rental of 7.5 percent of the unimproved land value being written into the lease – meaning this cannot be challenged or negotiated.

142 and 152-160 Ngongotaha Road, Rotorua

This offering comprises an approximately 2,754-square metre site held in three freehold titles. The lessee improvements house a Gull Service Station plus a mechanics workshop trading as Extra Mile.

Salesperson Brendon Bradley said the property occupies a high-profile position on Ngongotaha Road, a main thoroughfare about 10 kilometres north of Rotorua city and a short distance from Lake Rotorua.

“The immediate locality is a retail and shopping hub with some light industrial and automotive occupiers, surrounded by an established residential catchment,” Bradley said.

The property is zoned Commercial 1 (Ngongotaha Centre) under the Rotorua

Lakes Council District Plan.

The ground lease returns $66,000 plus GST per annum and is subject to a 20-

year terminating term, with five-year rent reviews. The next review is in 2023 and the final lease expiry is in 2027.

101 Queen Street West, Hastings

This address comprises a freehold site of some 1,545 square metres, with the lessee improvements containing a two-level commercial/retail building which is owned and occupied by ANZ.

Salesperson Rollo Vavasour said it was positioned in the heart of the central Hastings commercial precinct – alongside a Bunnings store and surrounded by other established retail and commercial occupiers.

The property is zoned Central Commercial under the Hastings District Plan, an

intensive zoning allowing for a range of commercial and retail development.

The ground lease returns $59,050 plus GST per annum and is subject to a 20-year terminating term, with five-year rent reviews. The next review is in 2024 and final lease expiry is in 2029.

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