Sale of two majestic Wellington properties

5:00 AM Saturday August 19, 2017 Colin Taylor

The landmark Majestic Centre is a dominant feature of Wellington’s Golden Mile. Photo / Supplied

Two big Wellington area properties, the Majestic Centre in the capital’s CBD and North City Shopping Centre at Porirua, have been put on the market by listed property company, Kiwi Property.

The two properties can be purchased separately or together, says Andrew Stringer of CBRE who, with colleague Matthew St Amand, is marketing the duo exclusively through an international expressions of interest process, with submissions closing at 4pm on Thursday September 21.

“The Majestic Centre is a prime city office tower that has been seismically strengthened and North City is one of two large scale regional shopping centres serving the Wellington region,” Stringer says.

“Both have been solid performers in Kiwi Property’s Wellington portfolio, with the company having held both assets for more than 20 years.”

The Majestic Centre is situated in a stretch of Wellington’s retail area known as the Golden Mile. One of Wellington’s tallest buildings, it occupies a high-profile 3617sq m site on the corner of Willis and Boulcott Sts.

The complex encompasses 21 levels of A-grade office accommodation, four podium levels, 12 retail outlets and a freestanding two-storey historic building incorporating a restaurant and bar giving a total lettable area of about 24,615sq m and a typical floor area of around1000sq m. 

St Amand says the flexibility of space, diverse tenant mix and its impressive structure make the Majestic Centre an attractive proposition for investors. 

“Large floor plates offer spatial efficiency for small tenancies of 100 to 300sq m; and areas for large tenants of 500 to 1000sq m,” he says. 

“Featuring panoramic harbour views, it’s not surprising the building has close to 100 per cent occupancy and generates net passing annual income of approximately $8.4 million plus GST - with a weighted average lease term (WALT) of over six years.”

“The tenant mix 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.”

St Amand says a landmark premium office building centrally located in the Wellington CBD is hard to come by. 

The property’s ability to deliver well into the future has also been boosted by its recently completed $87 million seismic strengthening project as well as significant private and public investment in the immediate neighbourhood, he says.

“The result is, 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 per cent of the building’s net lettable area, including all the main office tower, achieved a performance rating equivalent to 100 per cent of NBS.

“The high-quality tenant profile testifies to the importance and quality of the recent strengthening work, which has positioned the property well to capture rental increases now occurring in Wellington’s prime office market,” St Amand says.

True Commercial - North City shopping centre, Porirua - aerial .jpg

North City recorded more than 5.3m visitors in the year to June 2017. Photo / Supplied

It is well served by public transport, with buses running past the building’s Willis St entrance and has good access to the main motorways and city’s arterial routes. 

The second property, North City Shopping Centre, is a 15-minute drive north of the Wellington CBD on State Highway 1.

St Amand says the fully-enclosed, three-level regional shopping centre is one of the strongest performers in Kiwi Property’s extensive retail portfolio. 

“It is perfectly placed to harness forecast population growth in the area,” he says.  

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, is located on a prominent site with a freehold area of 29,355sq m and part strata-titled share of 10,925sq m.

Situated just off SH1, North City recorded more than 5.3m visitors in the year to June 2017, with visitor numbers growing over 4 per cent per annum for the past four years.

St Amand says the property’s sales presents a rare opportunity to acquire a dominant regional shopping centre serving an extensive trade area, with strong trading performance and future expansion opportunities.

“Total centre sales growth rates at North City have been the highest in Kiwi Property’s retail portfolio at 7.5 per cent per annum on average since 2013.

“The current year-on-year moving annual turnover growth of 13 per cent and sales per square metre of over $8300 for specialty retailers, signifies 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,” St Amand says.

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

Stringer says the property sales coincide with increasing interest in the Wellington market off the back of sound fundamentals and a market flight to quality.

“Following a number of high profile campaigns over the past four months, we’re seeing very strong global capital flows, particularly from Asia into Australasia. Additionally, with increased competition for property across the Tasman, there’s a noticeable flow of investor interest into New Zealand markets, including Wellington.

“As a further endorsement of the quality of the properties and their strong expected future performance, Kiwi Property is open to potentially retaining a stake in both properties as part of their sale - allowing purchasers to retain Kiwi Property’s management expertise in a partner ownership model,” Stringer says. 

He says the combined offering of The Majestic Centre and North City is expected to generate strong interest locally and regionally, given they are both attractive property 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.

“Against this backdrop, the combined offering of The Majestic Centre and North City represents a first class offering that we expect will not be encountered again in Wellington for a very long time.” (1)

Matthew St Amand and Andrew Stringer of CBRE