The offer to purchase a lessor's interest in a substantial Epsom landholding creates quite an unusual opportunity, say agents.
The 1479sq m of land at 58-60 Market Rd comes with a perpetual renewable ground lease, generating annual rental income of $140,000 plus GST.
Rent is reviewed every-five-years, being calculated at 6.5 per cent of the unimproved land value, and about 10 years remain on the current 20-year-term, ending September 30, 2028.
Meanwhile, a clause enables the lessor to terminate the lease by giving six months' notice to the lessee to vacate the site.
"This highly unusual but attractive offering would provide a variety of options," says Bayleys' Alan Haydock, who is marketing it with colleague Damien Bullick.
"Like all ground leases it offers the ultimate, long-term, bottom drawer passive investment. However, this one comes with the flexibility of being able to develop strongly located Mixed Use zoned land at relatively short notice, by exercising the termination clause."
The site is for sale by a tender process, closing 4pm May 1, unless sold earlier.
Bullick says the property is in a high profile and strategic city-fringe position, with easy access to the southern motorway and close to the intersection of Market and Great South Roads.
"The site is occupied by the lessee's business: The Pool People, a well established pool maintenance and sales company. The land is ideally suited to this type of business, having good exposure to passing trains and vehicles.
"It offers convenient access to a range of amenities, including cafes, restaurants and a variety of shops and is in, the Double Grammar Zone.
A mixture of original character homes and commercial and retail buildings surround the land, while nearby Gt South Rd commercial precinct comprises larger retailers and car sales yards.
"The property offers easy access to Remuera and Newmarket, as well as being close to the motorway and Auckland CBD is about 10-minutes-drive," says Bullick. "The Business Mixed Use zoning's permits residential, offices, retail, food and beverage and healthcare (or a mixture of these), up to a height limit of 18m."
Haydock points out ground leases seldom come up for sale, being keenly sought-after by investors for a range of reasons.
"They don't come any better in terms of a hassle-free investment. As the lessor owns the land only and the lessee owns any structures on it, responsibility for building maintenance and outgoings lies with the lessee."
Haydock says ground rent reviews are based on increases in land values only and historically ground rents rise at a faster rate than building values.
Bullick adds that the termination clause in the ground lease also provides the new owner with the option of freeholding the land for development. "Should the purchaser want to build apartments on the site and unit title these, they can invoke the termination clause and remove the lessee on six-months-notice."