A five-level, high-profile and fully leased Khyber Pass office building that has been upgraded and is seismically strong, is being marketed for sale by Jonathan Ogg and Warren Hutt of CBRE.
"This building will attract prudent investors seeking a strong passive holding property," Ogg says. "It is a well-presented building with a full complement of quality tenants with a good weighted average lease term."
The building at 210 Khyber Pass Rd is being offered on behalf of the owner, 210 KPR, and will be sold by deadline private treaty closing at 4pm on September 25 unless sold beforehand.
"This property is very well positioned for future growth and development," Ogg says. "It is anchored by international heavy hitter Zimmer and has a strong cash flow profile. It also presents alternative future use options as the area continues to go through considerable evolution and growth with the redevelopment of the nearby Lion site and a number of office buildings being converted into residential apartments."
Ogg says attraction of the neighbourhood is rising exponentially with the University of Auckland's redevelopment of the former Lion Breweries site in Newmarket now actively underway and "the prospect of thousands of people flocking to the area upon completion".
"As a potential sweet spot for private investors and family trusts seeking an attractive yield with the potential for future development, it's already attracting interest from a wide range of investors from across New Zealand and overseas."
The 1980s building occupies a 1555sq m strategic freehold site with three street frontages to Khyber Pass Rd, Parkfield Terrace and Claremont St. Divided into several tenancies around a common, central access core, the building offers a total of 3043sq m of lettable space, with parking provided across two basement levels which accommodate 52 cars.
Hutt says that over the past two years the owners have undertaken an upgrade of the building including all common areas, bathrooms, lift, lobbies and all tenancy areas.
"Recent renovation and refurbishment to the tenancies included new carpets, new suspended ceilings together with upgraded air conditioning and fire protection services. Common area bathrooms, corridors and stairwells have been recently refurbished to a modern standard.
"A recently completed engineering report highlights the building at 100 per cent of the New Building Standard [NBS], which is highly beneficial in the current market for mortgage lending purposes and insurance cover and also as a prime consideration for occupiers."
Five tenants generate a net annual rental of $720,267, plus GST, with a weighted average lease term to expiry (WALT) of five years based on net operating income. Medical supplier company Zimmer New Zealand occupies 1391.21sq m of the rentable space equating to 46 per cent of the total property.
A tenant in the building since 2004, Zimmer is the New Zealand subsidiary of New York Stock Exchange-listed Zimmer (NYSE: ZMH). With a market capitalisation of US$13.4 billion, Zimmer provides high-quality orthopaedic products and has in recent times more than doubled its sales and customer service teams to manage demand.
Taxicharge, New Zealand's only specialist nationwide taxi billing solution, has been a tenant in the building since 2004. Occupying 441.91sq m, it committed to a new six-year lease beginning 2010 for majority of Unit E of Level 4 along with 10 car parks.
The Knowledge Warehouse Unit Trust, occupying 469.36sq m on Level 5, is part of an associated group of companies, headquartered in Melbourne Australia, which offers an extensive range of data collection solutions.
Country Wide Monitoring Services occupies 260.54sq m, also on Level 4 and has been a tenant in the building since 2008. It provides security monitoring services to small to medium-sized enterprises throughout the greater Auckland region.
Occupying 349.04sq m on Level 3 is Auckland primary health organisation PHO Limited. It is government funded and is one of the five PHOs that form part of the Auckland District Health Board
Murchison Group Property Management, a successful boutique commercial property management and consultancy company, occupies 130.74sq m, also on Level 4.
"As the property managers of 210 Khyber Pass Road, Murchison Group has played a major part in the transformation of this property and would welcome the opportunity to continue in this role," Ogg says.
"With over 40 per cent of the annual income stream being generated by Zimmer, the reduced risk offered by multiple tenants and built in annual Consumer Price Index rental growth within the lease terms, this is property provides a strong and stable cash flow for investors."
Under the operative District Plan, the property is zoned Mixed-Use, which has an emphasis towards retail, residential and commercial activity to provide for a diverse mixed use environment.
"This property will benefit significantly from the redevelopment of the 5.2ha former Lion Brewery site," Ogg says. "The University of Auckland completed its purchase of the site in May this year and is actively progressing the development of the site to create a mixed use campus, with purpose-built teaching and research facilities, student accommodation, business development and other facilities."