A landmark Christchurch city building, occupied by law firm Saunders & Co and popular nightspots Mexicano's and The Dirty Land, has been sold for $11 million to a private investor through Jonathan Lyttle of Savills Real Estate.
"This sale represents a low 6.97 per cent yield, shows there is plenty of appetite for strongly-tenanted investment properties in good locations," Lyttle says.
"This high-profile spot on busy Victoria St is hard to beat as an investment location. Add in the reputable developer, quality buildings, long-term leases and excellent tenant mix, and it has very attractive set of investment fundamentals. Because of this, we had a number of offers at sharp yields."
The building is also tenanted to architects MAP and recruitment firms Hays and EQI Global. It was sold along with the fully-leased car park next door at 133 Victoria St, the former site of the Department of Conservation, where 45 car parks are mainly leased to the tenants in 131 Victoria St.
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Together, the two titles generate annual net rental income of $766,813, with rent reviews built in to the leases.
Lyttle says the freehold property's sale by Countrywide Property comes at a time when good quality commercial investment stock in Christchurch is in high demand and difficult to come by.
"Since the earthquakes, new investment assets in good locations have been sought after. Investors have recognised that in a low interest rate environment, commercial property offers a much better return than cash sitting in the bank. Even though prime commercial property yields have been trending downwards, the asset class still offers a very significant return margin over bank deposits."
Lyttle says Countrywide Property bought the earthquake-damaged 1655sq m building, formerly occupied by Warren and Mahoney, and refurbished and strengthened it to 100 per cent of building code in 2013.
"The refurbishment has transformed the interior from a dated, partitioned office to a modern, open plan space with plenty of natural light and a contemporary fit out.. It can now be considered an A-grade asset."