An Auckland CBD commercial building that has been occupied by radio stations for nearly 25 years is for sale.
It has a lease in place to one of Australasia's largest media organisations but also offers development opportunities in the longer term.
The 3717sq m Radio Network building, on the corner of Cook St and Nelson St, is up for sale by international tender through Paul Hain of Bayleys Auckland, closing April 10 unless it sells earlier by private treaty.
The Radio Network (TRN) has a nine-year lease over the entire building at 54 Cook St from July 2007, with three rights of renewal of three years each, taking the final expiry date to mid-2025. TRN's seven core radio stations operate out of the building: Newstalk ZB, Classic Hits, ZM, Hauraki, Radio Sport, Coast and Flava.
Hain says the lease provides its owner with inbuilt income growth as the property's annual net rental income is adjusted upwards every three years by the increase in the consumer price index. When it began, the lease produced $800,000 and has since risen to its current level of $929,900 at the last review in July 2013.
Hain says under the property's triple net lease structure, the tenant is responsible for remedying and repairing any maintenance works, where required, every five years.
TRN has recently spent about $700,000 modernising the building's four floors.The top three levels comprise a mix of broadcast studios, fitted out with state of the art equipment, plus offices for support, sales and management functions. The ground floor has a reception area and also houses 33 covered carpark spaces which benefit from direct access to both Cook St and Nelson St.
TRN was formed after the sale of Radio New Zealand Commercial, a state-owned enterprise, by the Government in 1996. It now operates more than 130 radio stations in 26 locations across New Zealand and is a wholly owned subsidiary of APN News & Media. APN recently undertook a capital raising to help fund its A$132 million ($141.3 million) acquisition of United States-based Clear Channel Communications' 50 per cent shareholding in TRN and the Australian Radio Network.
In a letter to shareholders, APN chairman Peter Cosgrove said the company now owns 100 per cent of the largest network of radio stations in New Zealand and Australia.
"The acquisition is expected to considerably rebalance the earnings profile of APN, with the majority of the company's future earnings expected to come from its growing radio, outdoor and digital media business." APN also publishes more than 120 newspapers in Australasia, including the New Zealand Herald.
Hain says in addition to its strong tenant covenant, the property encompasses a good-quality building on a prominent 1497sq m corner site.
He says the site is relatively underdeveloped compared with several surrounding properties which have been redeveloped into apartment complexes.
It has a Strategic Management Area (SM3) zoning which has a 50m height restriction.
Hain says the site would lend itself to high-rise development given its corner position provides plenty of natural light and its elevated location offers panoramic city and harbour views. It also has easy access to State Highway 1 and SH16, with the junctions for north, south and westbound traffic less than 500m from the property.
"There is currently strong demand for mixed-use development land in this area, with the progressive western side of Queen St becoming increasingly popular with tenants.
"Tournament Parking has revitalised the former Auckland City Council workshop site across the road, which is now fully occupied by eateries, fashion outlets and character offices, and two development companies are currently preparing comprehensive site structure plans for nearby properties."
The TRN building, of concrete-framed construction with glazed curtain walling on the outside, housed Kodak NZ before it was purchased by Radio New Zealand in 1989.
In his book ZB: The Voice of an Iconic Radio Station, Bill Francis, former station manager of ZB Auckland, says Sir Robert Jones, who has a well-known preference for free-standing corner buildings, was on the board of Radio NZ at the time and strongly recommended buying the building.