Investors who purchased a $50,000 stake in one of the four buildings in Spark's head office complex less than four years ago in an Augusta Funds Management syndication will receive just over $58,000 back.
The building has been sold to a Singaporean investment company for $77 million, providing investors with a 16 per cent increase on their original equity, says Augusta.
The 7495sq m office building on the corner of Victoria St West and Dock St, in the Auckland CBD has been purchased by SCORE+, a Pan Asian fund managed by Singapore based SC Capital Pte Ltd at a 6.9 per cent yield in a transaction brokered by Bayleys executive director David Bayley, in conjunction with Paul Hain.
According to the fund manager, Gillian Chee, SC Capital has transacted over $US2 billion worth of property purchases in Asia since its establishment in 2004. It is the fund's second acquisition in New Zealand and follows its purchase last year of a large commercial and student accommodation building in Wellington.
David Bayley says SC Capital was keen to establish a presence in the Auckland CBD and looked at a number of options before deciding on the Spark building.
"They liked it because of the quality of the location, property and tenant. It fitted nicely with their strategy of providing a diversified, stable and scalable portfolio to their investors. The property also offered a comparatively higher yield than similar quality properties in Asia and favourable tenancy terms for long term income growth and capital appreciation."
Auckland development company Mansons TCLM completed what was then known as Telecom Place — comprising four 5 Green Star office buildings linked by a large central atrium — in 2014. Augusta Funds Management purchased one of the buildings with a 10-year lease in place to Telecom (now Spark) for $65,186,117. It sold a total of 780 proportionate interests of $50,000 each in the property through Bayleys' Investment Products and Syndication division. Augusta has continued to manage the Victoria Dock Nominees Joint Venture, established in September 2014 to own the building on behalf of the 371 investors who purchased one or more $50,000 interests in it.
These investors have also received an annual income return of 8 per cent, paid monthly out of the property's rental income which increased to 8.5 per cent in August 2017, says Augusta executive director Bryce Barnett.
"Investors predominantly invest in our funds for the long term monthly income returns they provide, which are currently well ahead of what they can earn in the bank. However, there is also the possibility in strong commercial property market conditions like we have experienced in recent years of securing a good capital uplift as well.
"In this instance, a very good offer was received for the Spark building which we felt was prudent for investors to consider and they overwhelmingly decided to accept it. Due to the regular stream of fund offerings we now have coming on the market we were able to offer those investors new options to invest their sale funds in and we arranged for a significant number of them to reinvest in the Augusta Industrial Fund which recently closed oversubscribed."
Barnett says most of the increase in value of the Spark building came from the lease's fixed annual rental increases of three percent, although there had also been a slight firming in the property's capitalisation rate from a yield of 7.25 per cent when the property was acquired in 2014 to 6.9 per cent on the latest sale price. He says the successful sale also reflects the value to investors of the strategic partnership that Augusta has established with Bayleys Real Estate.
David Bayley says there continues to be very strong foreign investment interest in the New Zealand commercial property as evidenced by a number of substantial sales to offshore parties this year.
Another of these is a completely redeveloped, new 4000sq m office building plus 94 internal car parks on a 1960sq m site at 20-22 Pollen St, Ponsonby which was sold for $37,857,304 at a 5.75 per cent yield on leases to mostly creative and technology tenants.
It was sold on behalf of Triumph Capital to a private European investor making their first purchase in New Zealand through Chris Bayley and Lloyd Budd, Bayleys Auckland, with Tim McEnallay from Venncap Sydney acting as a consultant to the purchaser.