AMP Office takes $15m hit on Chews Lane
The listed AMP NZ Office Trust has sold the last of its Chews Lane development taking a $15 million hit.
Stock Exchange-listed AMP NZ Office Trust has taken a $27 million hit on the sale of its remaining five retail units in Wellington’s Chews Lane.
AMP NZ Office Trust bought the development at the height of the property market boom in 2007 for $77 million, and it was redeveloped by Willis Bond & Co into 19 retail stores and 15,00sq m of offices with 197 car parking spaces.
The trust has placed the property on the market in three separate offerings – gleaning a total of $62 million when the latest sales are included.
As part of the development, seven office floors were constructed overlooking Willis Street.
In 2007, the chief executive of the company that managed the trust, Rob Lang, had optimistically forecast that the complex was under-rented by 8.5% and the investment performance outlook for the building was “excellent” with the three year average total return expected to be more than 11.5% a year. It was a “compelling” investment, he had said back then.
But the trust subsequently revalued the property down to $52 million.
The major tenant in the Chews Lane six-level building is the New Zealand Transport Agency, which has a 15-year tenancy. The 7286sq m landmark property at 50 Victoria St, Wellington is a seismically strengthened A-grade building in the capital.
The building is on a 250 year ground lease from Wellington City Council at a rental of $1 a year with no reviews. The marketing agents claim this is “effectively” freehold.
In its announcement today, the trust said the units had been sold to a combination of private and institutional investors for a total of $50 million in cash, “representing a 3.3% premium to its 2010 financial year valuation”.
The sale reflects a passing rent yield of 8.2% and a yield on market rent of 7.5%.
Shares in AMP Office Trust last traded down 2c at $83 each.
Chris Hutching
Mon, 18 Jul 2011
Mon, 18 Jul 2011
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AMP Office takes $15m hit on Chews Lane
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