35 Graham St in the central city, owned by Asset Plus and once tenanted by the council. Photo / Supplied
Rent revenue fell 33 per cent for listed property investors Asset Plus, owners of an empty Auckland CBD building once partly used as a Covid-19 vaccination centre.
The company, whose portfolio is now 42 per empty, declared a $120,000 loss, down on the previous $3m profit.
In the six months to September 30, 2022, its rent take fell from $6.4m to $4.3m.
“The primary driver was the impact of 35 Graham St now being fully vacant,” the company said of the former Auckland Council premises now under contract to be sold to Mansons TCLM and where vaccinations were given when the Government programme was in full swing.
But we don’t know how much its portfolio is worth because it wasn’t valued in the latest half year.
The company chaired by Bruce Cotterill has also sold the Eastgate shopping centre in Christchurch.
“The last six months have been challenging, but the company did secure the committed but deferred exits of both 35 Graham Street and the land at Kamo, and is now looking to market Stoddard Road for sale in the near term,” Cotterill said of a Mt Roskill retail investment.
The deferred settlement at Eastgate, sold for $43.45m, was also completed in late August, sold to Ben Cook and Kurt Gibbons’ Manhattan Capital. They have now re-listed it for sale, expecting to make more money out of it.
Gibbons said he and Cook had been working on the property for nearly two years and repositioned it to be ready for sale directly after settlement.
“We have subdivided it and also leased out more space to Countdown. We’re now just looking at our options,” Gibbons said in September.
Asset Plus shareholders are getting no dividends, stopped indefinitely until operating earnings are restored.
CEO Mark Francis said: “In selling assets, we’re losing rental income but we’re converting to cash.”
Graham St will remain vacant until it is sold to the Mansons next December for $65m, Francis said, “subject to the potential for short-term tenancies”.
The company’s big investment and major hope is its new development on Munroe Lane at Albany. There, it has a deal to build new premises which will partly be occupied by the council as its new northern service centre.
“Leasing efforts continue at Munroe Lane and while we haven’t secured any additional tenant commitments, construction is nearing completion. Prospective tenants have been able to view the campus-style floor plates and see the fundamental aspects of the property, its location and sustainability credentials,” Cotterill said.
Munroe Lane is due to be complete next April when the council will take occupation.
Construction is 80 per cent complete and level three has recently been handed over to the tenant for the start of a fit-out.
“The balance of the leasing is proving challenging in the current climate,” today’s statement said.
“However, as the building nears completion, the company believes it can generate greater traction with prospective tenants given the strong underlying benefits of the property, and its decentralised location in this key northern Auckland node.”
Francis said today the clear direction forward was selling the Mt Roskill retail centre whose anchor tenant is The Warehouse, finishing the Albany building which will have a completed value around $150m and possibly selling that building.
“Once it’s fully completed and leased, we’re going to review our options including selling it,” Francis said.
Around 67 per cent of that 26,500sq m building is leased to the council on a 15-year term.
“We’ve got a retail tenant on the ground floor being signed up and various leasing conversations going but nothing confirmed at this stage,” Francis said.
“Falling valuations are irrelevant to the leasing market. We’ve anchored the building with the lease to the council, it’s green star rated and the rents we think are very fair. We did the council deal at $420/sq m net per annum which for a green star-rated space is very competitive. We’re working with agents on leasing the balance. We’ll obviously get it leased. I just can’t tell you when,” Francis said.
Asked why a property business would sell so much real estate lately and consider selling more, Francis said now was a good time to have cash.
“But we’re not a forced seller. We’re a seller if we get the right price.”
Shares are down nearly a third to 21c, giving a market cap of just $76m, making it the smallest listed real estate vehicle trading on the NZX.