Z site ideal Wellington passive investment

11:32 AM Tuesday November 22, 2016 Colin Taylor

The Z Harbour City site at 1 Whitmore St, Wellington.

The ground lessor’s interest in the two land parcels, which make up part of the Z Harbour City site in central Wellington are offered for sale promising investors a stable, long term cash flow.

“This sale offers a rare opportunity to acquire passive investments occupied by a publicly-listed tenant in a prime central-city location,” says Richard Findlay of Colliers International who, with colleague Michelle Chadwick, is marketing the interest in the parcels at 1 Whitmore St for sale individually by tender closing on December 8.

“The two parcels are leased individually to Z Energy and a wholly-owned subsidiary of Z Energy on perpetually-renewable 20 and 21-year leases,” says Findlay.

“Together the parcels make up 392sq m of land area and provide a combined annual net income of $165,870.

“This is a completely passive, zero-maintenance investment with a substantial, secure income stream. With two perpetually-renewable, extra-long term leases in place, the ground lessor can avoid the risks usually associated with property ownership, through holding a secure and non-depreciating portion of the property,” Findlay says.

Chadwick says the zero-maintenance, low risk and passive nature of the long-term investment opportunities is expected to appeal to buyers.

“Many investors are looking for security and cash flow. Holdings such as this offer attractive, stable, defensive characteristics and low default rates,” she says.

Findlay says Z rebranded the site as part of its nationwide brand roll-out which was completed in 2012, indicating its commitment to the location.

“The perpetually-renewable lease arrangements will be viewed as a big plus among investors, providing long-term income security along with the potential for income growth from rent reviews.”

Formed in 2010 through a joint venture between Infratil and the New Zealand Superannuation Fund, Z Energy operates a network of over 350 service stations and truck stops around the country, along with pipelines, fuel terminals, bulk storage facilities and a share in the Marsden Point oil refinery.

In June 2016, Z also purchased the assets of Chevron New Zealand, which makes Z the wholesale fuel supplier to Caltex service stations.

“In just a few years Z Energy has emerged as a market leader and a real New Zealand success story,” Findlay says. “The size of the company’s network and its large portfolio of assets make it an ideal heavyweight, stable tenant.”

Chadwick says the site has been home to a petrol station since 1963. “Wellingtonians are familiar with this convenient CBD service station, which was taken over by Shell in 1995. “It’s the only petrol station at the northern end of the CBD and services Wellington’s corporate sector as well as traffic passing along Customhouse Quay.

“This part of the CBD is undergoing significant revitalisation and development, with the construction of two new A grade office projects – the new PwC building and 20 Customhouse Quay – just a stone’s throw away.

“The area has long had a place in Wellington’s dress circle overlooking the waterfront. It was also recently announced that the nearby Bowen Campus will undergo a significant $213 million redevelopment for Government tenants.

“The Z properties are in the heart of a vibrant, commercial zone and close to Wellington’s waterfront entertainment precinct. Also located in this region is the TSB Arena, a popular concert venue, along with many restaurants, bars and hotels,” Chadwick says.

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Michelle Chadwick and Richard Findlay, Colliers International.