Oyster Property Group Ltd has unconditionally contracted to buy the Cider building on the corner of Williamson Avenue & Pollen St in Ponsonby at a yield of 6.74%, equating to a purchase price of about $93 million. Settlement is due in June.
Oyster chief executive Mark Schiele said the multi-investor ownership structure would ultimately be the largest Oyster has created. It’s offering 50 $1 million interests to wholesale investors only, with a projected pretax return of 7.5%/year. An information memorandum will be available to interested investors from April, with shares offered for sale in conjunction with Colliers.
The new 13,200m² mixed-use retail & office development on the property previously occupied by the DYC vinegar factory is due for completion before the June settlement.
The Progressive Enterprises Ltd development will have a 4000m² Countdown supermarket on a 20-year lease, 8000m² of office on 3 floors, 11 specialty retail tenancies in 900m² along Williamson Avenue & Pollen St and about 520 basement parking spaces. Cider will be 100% leased to General Distributors Ltd (Countdown), Fairfax NZ Ltd (on a 12-year lease) & convenience retailers.
The Vinegar Lane half of the site, a mix of homes & offices, has been developed separately and won’t be owned by Oyster. Occupants include architects, designers & engineers. It has apartments on the top floors.
Progressive Enterprises property general manager Adrian Walker said the sale of the distinctive mixed use site was a great result for the business: “From the outset, we knew this development would be an attractive offering for buyers given its great location & potential for future growth.
“We are not long-term property holders and would prefer to lease sites we have developed for our own supermarket use. The sale & lease of this property will allow us to generate capital which we can then reinvest in growing our business.”
CBRE senior capital markets director Jonathan Ogg, who brokered the Cider sale, said it was the largest city fringe transaction for many years in an area which was demonstrating exceptional growth: “The Ponsonby market is extremely buoyant at present, with demand for all property types coming from a range of sources.
“The number of apartments in Ponsonby & its neighbouring suburbs is currently over 1200, and over the next few years the supply pipeline indicates this will increase by a further 25%. This growth underpins the relevance of Cider as a trophy asset with strong yield potential, as well as the retail & office markets going forward.”
And Mr Schiele added: “Cider is an outstanding mixed-use development which has been extremely well executed by Progressive Enterprises in terms of its design fit in the Ponsonby area. As a groundbreaking development project in Auckland, it made good commercial sense for Oyster to acquire the property and to create an investment structure for it.”
He said property ownership structured for wholesale investors continued to be an important part of Oyster’s $800 million property & funds management business, alongside public syndication offers, the company’s recently announced Oyster Direct Property Fund and management mandates from institutional & private property owners.
Attribution: Company release.