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Queen Street office building ideally located to capture future value
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Best of the Capital hits the market

Wellington | 18 August 2017
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PR Majestic North City 610W RGB

New Zealand’s largest listed property group, Kiwi Property, is set to provide investors with a once-in-a-lifetime opportunity, offering for sale two of the fine property assets in the Wellington market. 

The assets to be offered include the seismically strengthened prime office tower, The Majestic Centre, and retail mainstay, North City Shopping Centre, Porirua – one of just two large scale regional shopping centres serving the Wellington region.

Both properties are being marketed exclusively by Andrew Stringer and Matthew St Amand of CBRE through an International Expressions of Interest (EOI) process, inviting submissions by 4pm on Thursday 21 September 2017. 

The properties are available to purchase either separately or together. 

Mr Stringer says the compelling offers come as interest in the Wellington market is increasing off the back of sound fundamentals, and a market-wide flight to quality.

Both The Majestic Centre and North City have been solid performers in Kiwi Property Wellington portfolio, having held both assets for more than 20 years,” said Mr Stringer. “Off the back of a number of high profile campaigns over the past four months we’re seeing very strong global capital flows, particularly from Asia into Australasia. With the increased competition for property across the Tasman, there’s a noticeable flow of investor interest in to New Zealand markets, including Wellington.”

“Given the stature of the assets being offered by KPG, we’re expecting to see strong interest from both regional and local investors. And, as a further endorsement of the quality of the properties and their strong expected future performance, Kiwi Property– New Zealand’s largest and oldest listed property company - has also expressed it is open to the potential of retaining a stake in both properties as part of the sale, allowing purchasers to retain Kiwi Property’s management expertise in a partner ownership model,” said Mr Stringer.

The grand dame of the Golden Mile: the Majestic Centre

Located in the CBD on Wellington’s retail ‘Golden Mile’, The Majestic Centre offers 21 levels of A-Grade office accommodation, four podium levels, 12 retail shops and a freestanding two storey historic building, which incorporates a restaurant and bar.

The Majestic Centre enjoys a high-profile location on a 3,617sqm site on the corner of Willis and Boulcott Streets, and is one of Wellington’s tallest and most recognised buildings. The property is well connected to public transport, with bus services running past the building’s Willis Street entrance. It is also well positioned for vehicular access from the main motorways and arterial routes in and out of the city.

With a lettable area of approximately 24,615 sqm and a typical floor area of approximately 1,000 sqm, Matthew St Amand says the flexibility of the space, its diversity of tenant mix and the iconic nature of the building makes The Majestic Centre an extremely attractive proposition.  

“Large floor plates offer spatial efficiency for both small (100-300sqm) and large tenants (500-1,000sqm). Coupled with amazing panoramic harbour views, it is not surprising the building has close to 100% occupancy. The property enjoys net passing income of approximately $8.4 million per annum plus GST and a weighted average lease term (WALT) of over six years,” said Mr St Amand. “The tenant mix is the envy of other buildings in the CBD, as it consists of a diverse range of high quality companies from the public and private sectors, including EY, the Government’s roading infrastructure arm, NZTA, the Embassy of Japan and Opus International.”
Mr St Amand says a landmark A-Grade office building this centrally located in the Wellington CBD is hard to come by and the asset’s ability to deliver well into the future has also been boosted by a recently completed $87 million seismic strengthening project as well as significant private and public investment in the immediate neighbourhood.

“The result of the project is that The Majestic Centre now has best-in-class seismic capabilities, making it extremely well placed in the Wellington market, where a high New Building Standard (NBS) rating is of absolute importance for occupiers across the board. At completion of the seismic strengthening upgrade, 97% of the building’s net lettable area (including all of the main office tower) achieved a performance rating equivalent to 100% of NBS.

“The high-quality tenant profile is testament to the importance of the recent strengthening work, positioning the asset well to capture rental growth occurring in Wellington’s prime office market, said Mr St Amand.

 

Retail hub poised for growth: North City Shopping Centre

As a fully enclosed three level Regional Shopping Centre just 15 minutes north of the Wellington CBD, North City is one of the strongest performers in Kiwi’s extensive retail portfolio, and is perfectly placed to harness expected population growth in the area.

Anchored by department stores Kmart and Farmers, plus a Reading Cinemas complex, North City has 68 specialty tenancies, 11 kiosks, 11 food court tenants, and eight suites of office accommodation on the third floor.
Constructed in 1990, with refurbishments and extensions completed in 1997 and 2004, the centre is located on a prominent site with a freehold area of 29,355sqm and part Strata Title share of 10,925sqm.

Well-situated just off State Highway 1, North City has recorded more than 5.3 million visitors in the year to June 2017, with annual visitor numbers growing at over 4% per annum for the past four years.

Mr St Amand says the property presents a rare opportunity to acquire a dominant Regional Shopping Centre, with strong trading performance, an extensive trade area and future growth opportunities.

“Total centre sales growth rates at North City have been the highest in Kiwi Property’s retail portfolio at 7.5% per annum on average since 2013, indicated sustained performance,” said Mr St Amand. “The current year-on-year moving annual turnover growth of 13% and sales per square metre of over $8,300 for the specialty retailers underpin a healthy, well performing centre. “With 11 housing developments planned for North City’s primary and secondary catchments, the future for this centre remains bright.”

One of the major tenants, Farmers, recently agreed to a new 15-year lease, underpinning their commitment to the centre. Farmers will be undertaking a refurbishment of their store in 2017.

Mr Stringer says the combined offering of The Majestic Centre and North City is expected to generate a great deal of interest locally and regionally, given they are both attractive assets with solid rental growth prospects and sound occupancy statistics. 
“The Wellington market has experienced a notable increase in liquidity and buyer interest in assets over $50 million in the past two years and there is an emerging trend of maiden investors to the Wellington market attracted by a yield premium when compared to other Asia Pacific locations,” said Mr Stringer.  “Against this backdrop, the combined offering of the Majestic Centre and North City represent a first class offering not to be encountered again in Wellington for a very long time.”

For further details on these two exciting investment opportunities, visit the property information page by clicking here.
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