Whanganui District Council walks away from $1.6m property purchase

The Flynn properties comprise 63 and 65 to 71 Ridgway St. Photo / Mike Tweed

Whanganui District Council will not go ahead with buying several properties in the central city after further investigation revealed they need a lot more work than expected.

The “Flynn” properties - 63 and 65 to 71 Ridgway St - were originally part of a $3.9 million trio of property purchases that could have enabled a proposed $55m hotel and carpark project that was outlined in the council’s draft 10-year (long-term) plan.

The council’s hotel project was scrapped following the LTP’s public consultation period, but $200,000 was included in the 2024/25 budget for a feasibility study to attract potential developers.

Whanganui Mayor Andrew Tripe said there was a conditional agreement for the Flynn properties and the deal was called off after due diligence.

“One reason for that was how much we would need to spend on it,” he said.

“It wasn’t a prudent purchase so we declined.”

Buying all three properties would have required $416,000 of debt funding but that was no longer needed, Tripe said.

An additional $1.2m would have been kept in city endowment portfolio reserves, which were to be used to cover the rest of the $3.9m total cost.

Chief executive David Langford said the council walked away from the Flynn agreement after “a proper look around”, when it was decided the return on investment was not good enough.

A council report from May said buying the Flynn properties would mean the council picked up five current leases across the buildings, with an annual revenue of $65,000.

The upstairs of the properties - a one-bedroom apartment and several hostel-like rooms - could also be tenanted to increase revenue.

The council drew criticism after signing off on the purchases before public consultation began on the LTP.

A public petition against the purchases was launched online, with several councillors also voicing their disapproval at the timing during a council meeting in May.

Speaking at that meeting, Langford said purchasing the properties would enable the possibility of a hotel but it stood alone as an investment that would increase non-rates revenue.

Whanganui District Council chief executive David Langford. Photo / NZME

Tripe said Wakefield Chambers, bought for $816,000 from the Whanganui Port, was earthquake-prone but remained a great location for a four-star hotel for the right developer.

“We have always sought to strengthen our property portfolio where it makes sense and councils around the country are looking for non-rates revenue.

“There is no doubt property is a good way of doing that, where it’s responsible, where it’s cashflow-positive and where it makes sense.”

A report from Langford this month said the sale of the Whanganui Furnishers property had been completed and council officers were working with real estate agents to line up a new tenant ahead of the current lease expiring.

Part of the deal was a 12-month lease-back agreement for $120,000.

“There are active discussions with a national franchise business that could bring a new business to the CBD,” the report said.

“Due to the early stage of these discussions, the associated details need to remain confidential for the time being.”

Langford said the Whanganui Furnishers building, which cost the council $1.5m, did not need much upgrading.

“Generally, it’s not bad. As with all the buildings on the main street, they need a little bit of work.

“Again, we did our due diligence on that building. Our property staff and building inspectors had a good look around.

“Obviously, when we get new tenants in, they will want to fit out the building for their business. Some of the work will be covered by them anyway.”

Mike Tweed is a multimedia journalist at the Whanganui Chronicle. Since starting in March 2020, he has dabbled in everything from sport to music. At present his focus is local government, primarily the Whanganui District Council.