Ponsonby sale biggest city fringe real estate deal for years
Ponsonby’s new Cider building has been bought by Oyster Group for $93 million at a 6.74% yield.
It will be syndicated by Oyster to wholesale investors in 50 units worth $1 million each, with a projected pre-tax return of 7.5% a year.
Oyster chief executive Mark Schiele says the multi-investor ownership structure will be the biggest the company has created.
The 13,200m2 retail and office building to be finished in a couple of months was owned by Supermarket giant Progressive Enterprises and is part of a 1.3ha site.
The company will retain its links to the site through the 20-year lease of a new 4000m2 Countdown supermarket.
Progressive Enterprises property general manager Adrian Walker says the company is not a long-term property holder and would prefer to lease sites it has developed for its own supermarket use.
“The sale and lease of this property will allow us to generate capital, which we can then reinvest in growing our business.”
The rest of the property will encompass 8000m2 of offices across three floors leased for 12 years by media conglomerate Fairfax, 11 convenience retail shops across 900m2 on Williamson Ave and Pollen St and about 520 onsite basement carparks.
As one of the city’s first “real” mixed use developments, the building is on the old DYC vinegar factory site, which also encompasses the Vinegar building, which houses architects, designers and engineers in smaller offices and has apartments on top.
For years, the site was a gaping chasm known as Sohole. Layne Kells' Marlin Group bought the site and had plans for a $250 million apartment, office and retail development, known as Soho Square but went belly-up in 2009 owing $25 million to hedge fund Fortress and about $70 million to Strategic Finance. Progressive Enterprises bought the $20 million site in 2011.
CBRE capital markets director Jonathan Ogg, who brokered the Oyster deal, says the sale is the biggest city fringe deal for years. "With 1200 apartments in Ponsonby and its neighbouring suburbs to increase by a further 25%, growth underpins the relevance of Cider as a trophy asset."
Mr Schiele says property ownership structured for wholesale investors continues to be an important part of Oyster’s $800 million property and funds management business, alongside public syndications.