Yield barrier broken in bank site sale

The SBS Bank building on the corner of Queen and Market streets has been sold for a record-low yield, meaning a record-high price. Pictured are Colliers International Hawke's Bay director Cam Ward and agent Danny Blair. Photo / Warren Buckland

The 6 per cent yield barrier for Hawke's Bay commercial real estate has been well and truly broken with a 5.68 per cent yield for the sale of the SBS Bank building in Hastings.

Colliers Hawke's Bay director Cam Ward said while smaller properties in Havelock North and Taradale achieved a similar yield in the past, the SBS yield was the lowest "for quite a substantial property", on the corner of Queen and Market streets.

He said the Friday sale would prove a "great pay day" for agent Danny Blair, who both listed and sold the 100 per cent NBS building.

Net return was an advertised $169,000 per annum for the sale-and-leaseback with SBS Bank.

The bank recently signed a 10-year lease for the 1156sq m site with 21 car parks.

Property analyst Pat Turley said the sale was very close to expectations.

"It's a very low-yield market for prime commercial property," he said.

"The tenancy surety is prime bank and a leaseback term of 10 years is excellent. It's located in the heart of Hastings and in a keenly-sought affordable price bracket."

Mr Ward said the new owner was a local individual.

"We are very pleased to see it's a local sale and the money is staying in the Bay," he said.

The number of Collier's listings had fallen in the strong market but as prices rose vendors "sitting on the fence about selling are starting to feel compelled."

He said a large part of Collier's business was "off-market" - non-advertised brokering by Colliers between parties - "but I think this sale highlights in a competitive market situation we can really get a premium for vendors".

Interest in the SBS sale was high, from both within the region and outside.

He said similar low yields were achieved in Auckland because of expectations of capital gain. Thanks to a low interest rate environment and increasing Hawke's Bay capital values in the growing local economy he expected to see more sub-6 per cent sales for premium properties.

"I don't see the market lessening any time soon so prices may continue to firm."

Until recently the SBS Bank operated as HBS Bank in Hawke's Bay. SBS Bank merged with Hastings Building Society in 2010, after 98 per cent of Hastings members voted for the merger with what was the Southland Building Society.

The Hastings branch sits on an intersection where all four corners are bank buildings: Kiwibank, The Co-operative Bank and ASB Bank.