Published 21 August 2009
Ladstone Holdings Ltd (Ross & Dallas Pendergrast) has bought the Rialto Centre & adjoining Carlton DFK Tower in Newmarket from the National Property Trust for $49 million.
Ladstone manager Kim Bennett said yesterday the company envisaged about 6 freehold strata titles for the 2 buildings, with further subdivision into unit titles to be sold to investors.
“I’d imagine we’d be marketing them in about 3 months,” he said.
The National trust’s general manager, John Crone, said the sale price represented a 5.8% discount to valuations in the trust’s March 2009 books.
Retail & entertainment tenants occupy the 3-floor Rialto Centre. The Carlton DFK Tower has 2 floors of retail & 5 levels of offices & parking. Settlement is scheduled for 11 September. Mr Crone said the trust would initially use the net proceeds to repay bank debt, reducing its gearing below 25%. Mr Crone said: “The successful sale of these properties greatly assists with the manager’s current strategy, which is to reduce debt, improve the diversity of the property portfolio by reducing the weighting to retail and provide the opportunity to improve the weighted average lease term. The low level of bank debt also provides us with the ability to explore new opportunities that will enhance the value of the trust. “These successful sales come on top of recent leasing successes at our Eastgate Shopping Centre in Christchurch. With these new leases the centre’s total occupancy rate will sit at 98.9%, up from 96.3% at 31 March.” As Ladstone has done with other properties, it’s bought the Rialto to break up ownership. Mr Bennett said it was possible the whole block of new shops at the back of the centre on Osborne St could be sold as a single package and the centre’s cinemas would be on a single strata title.
The foodcourt would also have its own strata title, though Mr Bennett said foodcourt operators often liked to own their own premises and could be keen to buy unit titles.
Mr Bennett said Ladstone had previously cut properties into unit titles and this would be the first time it introduced strata titles with further unit-title subdivision.
Ladstone has some refurbishing it wants to do, which could result in a staggered marketing process.
“From our perspective it’s a very good added-value play. The market is pretty active up to $4 million. Some of these units will be above that level but the Osborne St shops, for example, are small and a really attractive investment size.”
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Attribution: Trust release, Ladstone phone interview, story written by Bob Dey for the Bob Dey Property Report.