Urbus shuffles its office portfolio

By COLIN TAYLOR


Listed property company Urbus Properties is offering a city fringe office block for sale and is seeking to lease a large warehouse in the North Harbour industrial estate.

The company is selling Infinity House, an eight-level building on Khyber Pass, and looking for a tenant for one of the North Shore's biggest warehouse buildings.

The Khyber Pass property has 5339 sq m of net lettable space located on a 2293 sq m site. It is producing rental income of just over $1 million a year.

Infinity House, at 60 Khyber Pass Road, was built in the mid 1980s and was originally the New Zealand head office of Australian agricultural services giant Elders Pastoral.

The building, which has six levels of office space and two levels of carparking, underwent an extensive upgrade four years ago before the signing of a long-term lease with anchor tenant Infinity Solutions Ltd.

As part of the refurbishment, a new air-conditioning chiller was installed along with additional air handling units. The fire protection system was also upgraded and the exterior of the building modernised and repainted.

Infinity, one of the largest New Zealand-owned IT and consulting companies, occupies the upper four levels of the building on a nine-year lease which expires in 2010. The balance of the fully leased building is occupied by three other smaller tenants on leases expiring between 2008 and 2010.

The property is being offered for sale by private treaty, closing December 10, through Stuart Bode and Alan Wills of Bayleys Real Estate.

Bode said a feature of the building was its elevated position and the panoramic views from the upper levels. Deck areas have been added to the northerly side of levels 4 and 5.

Bode said the property was well positioned between the CBD and Newmarket and close to the motorway. It had 98 carparks.

All of the leases had been renegotiated within the past few years with rentals set at rates, ranging from $155 per sq m.

Hamish Plimmer, chief executive of Urbus Management, said the sale of Infinity House was part of an ongoing rebalancing of the company's property assets. Urbus had a portfolio of 55 bulk retail, industrial and office properties around New Zealand with an asset value of more than $400 million.

As part of a five-year strategic plan, the board of Urbus had settled on a portfolio mix of 40 per cent industrial, 40 per cent retail and 20 per cent office. Urbus recently acquired two office buildings in College Hill at a combined value of $17.6 million.

The North Shore property at 221 Albany Highway encompasses over 9000 sq m of modern warehouse space in the North Harbour Industrial Estate, making it the biggest industrial building available for lease on the Shore.

It is being offered for lease through Nick Howe-Smith and Daryl Devereux of Bayleys North Shore, also by way of private treaty closing on December 8.

The building is sub-leased to three tenants on leases which are nearing the end of their terms. The 10,457 sq m building available for occupation next year has 9150 sq m of warehouse space with a 7.5m stud. The balance is in office and amenities, including a 192 sq m mezzanine-level cafeteria.

Howe-Smith said the North Shore was desperately short of warehouse space capable of catering for large businesses at present, with virtually nothing available for lease over 2000 sq m.

He said the ING Life building, as it was currently called, was recognised as one of the best large-scale industrial buildings on the Shore. It was originally constructed for Hasbro NZ in the mid 1980s.

It was a superb distribution warehouse on a prime corner site and there was plenty of flexibility for future expansion on the surplus land, he said.

The property encompasses 2.871ha of land and just over a third is covered by the existing building. Howe-Smith said there was potential to add up to 4750 sq m of additional accommodation should a tenant want to expand its business.

Urbus asset manager Scott Pritchard said the company's preference would be to enter into a partnership with a single tenant but the warehouse building was divided into 3555 sq m and 5594 sq m units and the property could accommodate more than one tenant.

He said a long-term tenancy arrangement was being sought as part of Urbus' strategy to optimise the performance of its portfolio

Urbus Properties has been one of New Zealand's top-performing listed property securities over the past 12 months, according to a recent analysis of share price movements by NZ Property Investor.

The company's ordinary share price rose 7 per cent during October and 18.9 per cent in the October year, the largest increase of any property share price for that 12 month period.

The company recently reported an after tax profit of $13.6 million for the six months to the end of September, up 12 per cent on the same period last year.

Pritchard said the Urbus property portfolio was 97 per cent occupied.

In mid September Urbus announced that merger discussions with ING Property Trust had commenced.