Affco House changes hands

By Bob Dey

Affco House in Auckland has been sold to a Singaporean buyer for $10 million in a tidy-up exercise by Colonial First State Investment Management.

The price is $870,000 less than NZI Life and Mayne Life Properties paid in 1995, but since then the building has also lost its big Albert St retail tenant, DFS New Zealand.

The duty free retailer moved to the other side of the Stamford Plaza Hotel two years ago, into the refurbished Old Customhouse on the corner of Customs St, and has not been replaced.

Meat company Affco is the main tenant of the 11-level office block, occupying eight floors on a lease running until 2011. One floor is vacant.

Chase Corporation completed the building in 1987 and sold it to ANZ Pensions. Mayne Life, part of the Trident Properties group, was a two-year investor in the building.

Its partner, NZI Life, was taken over by Prudential, which in turn was taken over last year by Colonial, and Colonial has since then established the Colonial First State listed property trust and begun rationalising its other property holdings.

The latest sale price represents a yield of 10.4 per cent on present rent, but David Bayley, executive director of Bayleys Asia, says the building offers potential rent of more than $1.3 million fully leased.

In a second transaction with a Singaporean buyer, listed company Hotel Grand Central has bought Greenock House on The Terrace in Wellington for $7.25 million on a 12.74 per cent yield.

Bayleys agent Mark Hourigan says most of the rents in the 13-storey building are at current market levels and several are lower.

David Bayley says the sales reflect a rekindling of South-east Asian interest in New Zealand property. Hotel Grand Central already has $100 million of New Zealand property assets and Bayley says both investors are keen to spread their property portfolio risk outside their home territory.

Bayleys Asia has conditional contracts for the sale of other substantial properties to Southeast Asian buyers and is about to launch an Investment New Zealand portfolio of 40 properties internationally.

The promotion has been timed to coincide with Apec and the America's Cup, drawing buyer interest from Asians attracted to high yields and Americans driven by their favourable exchange rate.

The American buyer interest is expected to be different, focusing mostly on lifestyle and tourism properties.