Savills negotiates big Christchurch deal
Three tenancies at 104 Victoria St earn annual net rental income of just over $1.4m.
Savills Real Estate has negotiated the sale by Countrywide Property of two prominent central Christchurch office and retail buildings, at 104 Victoria St and 32 Oxford Tce, to Silverfin Capital Ltd for $58 million following deals.
“The sale is the largest property deal in Christchurch this year,” says Jonathan Lyttle, managing director of Savills’ Christchurch office. “It follows the city’s largest lease deal of the year - also negotiated by Savills - to Hoyts for a central city site opposite the bus interchange.
Lyttle says the sales have been concluded at a time when good quality commercial investment stock in Christchurch is in high demand and increasingly difficult to come by.
“New investment assets in good locations are highly sought after in Christchurch. There is very limited supply of prime investment stock and the few buildings that are coming to the market are getting snapped up – we had several offers for both these properties. This demonstrates the ongoing appeal of good quality commercial assets, which offer investors very good returns in a low interest rate environment.”
Silverfin Capital intends to sell down the buildings to individual investors, offering 634 proportionate ownership units in the assets priced at $50,000 each. The company is a licensed manager of Managed Investment Schemes that invests in real property or property syndicates/real property proportionate ownership schemes.
Cheryl Macaulay, managing director of Silverfin Capital, says the buildings represent excellent investment stock.
“Both these assets are well located, with great tenants, good lease tenures, and excellent seismic strength. They are the type of solid investment assets that Silverfin is happy to put its name to and add to our growing portfolio around the country.”
Silverfin, which began operating earlier this year, has also offered proportionate ownership schemes in commercial buildings in Hamilton and Auckland this year.
Lyttle said he and his fellow Savills agents had noted a “definite trend” of greater numbers of residential investors looking to buy commercial property.
The building at 32 Oxford Tce is mostly leased to Canterbury District Health Board.
“The already tight commercial investment market is now under even more pressure, with interest rates lower and loan to valuation ratio restrictions in place. This is prompting individuals who might have previously only owned residential investments to look at diversifying into commercial property. Proportionate ownership is a great way for these individual buyers to access the superior returns that are available on commercial assets.”
Lyttle says the refurbished five-level office and hospitality building at 104 Victoria St is home to US-based GPS software firm Telogis, Chinwag Eathai restaurant & bar and Total Fitness gym.
Savills received several inquiries from buyers given its “trophy” status on a popular hospitality, retail and office strip.
“This high-profile spot on busy Victoria St is hard to beat as an investment location. Add in the reputable developer, quality building and excellent tenant mix, and it’s a very attractive set of investment fundamentals.”
Countrywide Property bought the earthquake-damaged 3438sq m building and completed major refurbishment and strengthening work to 100 per cent of new building standard in 2014. “The refurbishment project has transformed the building into a stunning modern structure with plenty of natural light and a contemporary fit-out,” Lyttle says.
The three tenancies generate annual net rental income of just over $1.4m, with rent reviews built into the leases. The 1415sq m site has dual street entry points from Victoria St and Montreal St, as well as on-site car parking.
Lyttle says the five-level riverside building at 32 Oxford Tce, previously occupied by Deloitte, has been extensively redeveloped and is mostly leased to Canterbury District Health Board. It also has ground floor retail and hospitality tenancies.
During Countrywide’s redevelopment project, the building was gutted, strengthened, extended and re-clad in glass. Pedestrian access through the site links Oxford Tce to Tuam St.
It is the first completed building in ‘the health precinct’ and provides the latest sustainable technology including sensor-controlled LED lighting and high-performance glazing.
Countrywide managing director Richard Diver says the buildings’ sale will help fund other projects his company is working on in Christchurch.
Jonathan Lyttle, Savills Christchurch.