Plans for the new Albany building. Photo / Asset Plus
Plans for the new Albany building. Photo / Asset Plus
Hundreds of Auckland Council staff will move into a new $120 million Albany block, expected to be finished in three years.
NZX listed real estate minion Asset Plus has announced it snared the council in a highly sought-after deal to create new northern premises for staff, expected to relocate fromthe North Shore and West Auckland.
The business, which only owns three properties and has a market capitalisation of $102 million, has just announced the deal to develop 2.6ha indoor floor space for the council on a greenfields site, subject to shareholder approval and capital-raising. It went into a trading halt this morning.
Asset Plus will develop a six-level purpose-built 26,675sq m with a basement 212-carpark block at 6-8 Munroe Lane on a site never developed, between Westfield Albany and MEGA Mitre 10 on Oteha Valley Rd.
The council will be head tenant, taking nearly two-thirds of the block on an initial 15-year lease with two six-year rights of renewal, meaning it could occupy the planned premises through till 2046.
On June 17, Asset Plus announced it had bought the council's Auckland CBD service centre at 35 Graham St. It is yet to announce plans for that block above Fanshawe St in the Victoria Quarter but more offices there could be planned.
In April, the council said it would sell Graham St for $58m to reinvest in new service centres.
The council's customer service team will remain at Graham St until mid-2020 when it will move into other council-owned buildings Te Wharau o Tāmaki Auckland House on Albert St and Te Wharau o Horotiu Bledisloe House on Wellesley St, it said.
Around 1250 workers are moving to new north and south hubs but Westgate owner Mark Gunton expressed disappointment in August when Albany was picked.
Craig Hobbs, the council's regulatory services director, said recently the new Albany hub could be completed by 2022 but not how many of the 1250 staff would move there. Nor did he say who would build the centre or exactly where at Albany it would be.
The council called for expressions of interest from developers for an entirely new north-west hub. It got bids from developers at Silverdale, Smales Farm, Westgate, New Lynn and Albany.
"The quality of the EOIs was extremely high and respondents were asked to provide information relating to development preparedness, design, developer track record and commercial readiness, local amenities, connectivity to motorway infrastructure and distance to a major public transport hub. It proved to be a difficult decision; however, the selected short-listed sites are all in Albany," a spokesperson said in August.
Asset Plus today said today initial net rental at Albany would be $7.25m/year, development costs $120m, starting in 2021 and done by December, 2022.
Augusta's Mark Francis. Photo / Augusta
"With the anchor tenant now secured, Asset Plus will start marketing the remaining space to secure suitable tenants," the Asset Plus statement said.
The company needs to raise capital for such a big venture and has appointed Jarden to manage that. A shareholder meeting is planned for next year to vote on the Munroe Lane deal.
Mark Francis, managing director of listed Augusta which manages Asset Plus, said buying the Albany land was the second big deal for the business this year after the Graham St purchase.
Asset Plus was finding opportunities for projects where it could add value, he said.
Owen Batchelor, a Jarden research analyst, said last month that although Asset Plus offered one of the highest dividend yields in the sector, it "struggles to score well on most metrics due to scale." It was downgraded to neutral.
"Asset Plus remains in the early stages of a major repositioning of its portfolio," the Jarden sector research said. It had an opportunity to add value through the redevelopment of 35 Graham St in central Auckland.
The building at 35 Graham St in the CBD's Victoria Quarter. Photo / supplied
"Further growth involves a number of challenges. The most pressing of which is achieving a share price re-rate required to fund portfolio growth. "Near-term, Asset Plus's portfolio remains subscale and it scores poorly on our growth, portfolio risk and scale/overhead measures," Batchelor said.
Mark Francis, Asset Plus managing director, agreed last month that the business was "definitely too small". "When we took control of the company, we made it clear that our intention was to grow it but that growth obviously needs to be underpinned by clever deals. One of which we have done in 35 Graham St and others that we are working on. We have really good support from institutional shareholders for our strategy. We'll get there."
Until June 29 last year, the business was called NPT and previouisly the National Property Trust. On March 26 last year, August took over managing the business and launched its new brand.
However, Augusta has $2b assets under management in the office, retail and industrial sectors here and in and Australia. Francis founded it in 2001. It issued a newsletter to the NZX yesterday where Francis said it had not offered a new fund in the second half of this year.
