Papakura law offices for sale with long leaseback

10:01 AM Saturday September 6, 2014 Colin Taylor

View of two office buildings for sale and leaseback at 8 Queen St (left) and 10 Queen St in Papakura.

Two high-quality office buildings in central Papakura, south of Auckland, are being sold and leased back by their long term owner and occupier, a well-known local law firm.

Rice Craig, Barristers and Solicitors, which will celebrate its centenary in 10 years’ time, has operated its law practice from the properties at 8 and 10 Queen St, Papakura, for the past 40 years.

Featured in Colliers International’s latest New Zealand Portfolio magazine, the office buildings are being marketed by John Davies and Ash Vincent who are selling them by deadline private treaty closing at 4 pm on October 8 unless they sell before that deadline.

Davies says the firm is the longest established law firm in Papakura and is committed to the property, with a long term lease arrangement in place.

“Rice Craig was established in Papakura in 1924 and, despite making the decision to sell the freehold interest in these properties, will continue its law practice in the buildings with a leaseback arrangement of up to 26 years.”

Vincent says the firm’s decision to sell has opened up an excellent investment opportunity backed by five senior partners who run a respected and well established business.

“Rarely do property investment offerings of a smaller, accessible nature become available with such long-standing credible occupiers,” he says. “Not only is the tenant covenant very strong, but the tenant will also pay all outgoings and maintain and upkeep the buildings to their present very high standard.. This makes the purchase of these properties a superb, low maintenance and hassle-free passive investment.”

Tom Parker, partner at Rice Craig, Barristers and Solicitors, says the recent increases in property values had made it increasingly difficult for new young partners to be able to afford a share of the building assets on entering the firm.

“If we remove this barrier by selling the buildings, we will make it easier for young solicitors to enter into the partnership in the future. Many other law firms are taking similar steps, given the prevailing property market conditions.”

Parker says the partners hope to sell the buildings to an investor with whom a positive and long-term relationship can be founded.

“We are taking a long term view of our ongoing occupation of the properties, so we would like to build a relationship with a new owner who also sees this as a long term investment opportunity – enabling us to enjoy practising here for many years to come.”

Rice Craig will take an initial eight-year lease of the property, with the right to renew for three further terms of six years each – giving a possible final expiry date of December 31, 2039, or beyond by mutual agreement.

The properties will generate annual net rental income of $220,000, with rent reviews every two years.

Davies says both buildings have been substantially refurbished. “They provide modern, smart workspaces of which the firm is proud and is committed to maintaining in their present high quality, in order to reflect the standard of its legal work.”

Vincent says the building at 8 Queen St was built in 1985 by State Insurance and has a ground and mezzanine level.

“In 2008 the interior was completely gutted and reconstructed into a new, high standard architectural fit-out. A feature article commending the makeover was published in Commercial Design Trends magazine in July 2009.”

Davies says the standalone, two level building at 10 Queen St building was constructed in the early 1970s and has a prominent corner site exposure with plenty of natural light and air.

“It was extensively refitted in 2011 and 2012, including re-roofing. Exterior joinery has also been replaced and double glazed windows fitted throughout, along with lunchroom and bathroom upgrades, new carpet and paint. It now provides modern office accommodation of a very high standard,” Davies says.

The two titles make up 2029 sq m of land area. The grounds are landscaped and off-street parking is also provided on the property for 30 cars.