Southern Corridor building for syndication
The Unisys office building at 650 Great South Rd, Ellerslie.
Investors are being offered a projected nine per cent annual pre-tax return in Maat Group’s latest property syndication, of the Unisys office building in Ellerslie.
A total of 386 $50,000 share parcels are being offered in a company that will acquire the property, at 650 Great South Rd in the Southern Corridor office precinct.
Maat Group has entered into a purchase agreement to acquire the property for $31,800,000 from NZX listed Stride Property Group which is selling it to fund new development and acquisition activities. The agreement is conditional on a minimum of $15,800,000 of investors’ equity being raised under the syndication offer.
The five-level building, with a lettable floor area of 8335sq m, is located on a substantial 6573sq m freehold site at 650 Great South Rd, adjacent to the Goodman Group’s Central Park Corporate Centre near the Ellerslie-Panmure highway.
The property is fully leased to six tenants with government organisations occupying 5541sq m of the building and generating around two thirds of the property’s total net passing annual rental income of $2,616,581. Crown tenants include Inland Revenue, the Ministry of Health and Northern Regional Alliance Limited and Health Alliance NZ Limited which provide administrative services to the District Health Boards.
The balance of the building is occupied by Fletcher Building’s roading division and global IT company Unisys, which has been in occupation since the building was completed in 1997 and has naming rights.
This is Maat Group’s eleventh property syndication. It has previously successfully syndicated 10 other properties over the past six years with a total value of $150,000,000, ranging from $4,000,000 to $36,000,000. Director Neil Tuffin says about 55 per cent of the purchase price of these properties has come from investor subscriptions with the balance being funded by bank loans. Maat Property manages all of the buildings.
Tuffin says the sale of the Unysis building offered the opportunity to acquire a well tenanted and located building at an attractive price and yield.
“While some of the lease terms are shorter than is typical for our other syndications, investment risk is spread across multiple tenants with a variety of expiry dates and the property is situated in a popular office location. We consider the Southern Corridor is likely to benefit from strengthening tenant demand over the next few years as CBD office occupants seek reduced rental rates and become increasingly frustrated by the lack of carparking, the disruption and access problems resulting from a number of large scale construction projects and the difficult access to the airport
“Rental levels on better quality properties in the CBD are at a point where they are out of reach for cost conscious office occupants. With good premises available in the Southern Corridor for between $200 and $300 a square metre and plenty of affordable parking with easy access to the motorways, it will provide an increasing attractive alternative to the CBD.”
The 650 Great South Rd offering is being marketed by Brian Caldwell of Bayleys North Shore Commercial. He says the building’s big, efficient floor areas of 1970-2131sq m are an attractive feature for large tenants and could be easily subdivided if required. The building comprises a reinforced concrete structural frame with steel bracing and concrete columns, beams and floors. It has an A-plus seismic rating, with an Initial Evaluation Procedure (IEP) undertaken by Beca assessing it at 100 per cent of New Building Standard.
Caldwell says another major attraction for tenants is the property’s 297 carparks. The building’s basement accommodates 137 of these with an additional parking building on the southern boundary providing a further 64 covered parks. The balance is uncovered parks located around the building.