The chance to acquire the rarely-available ground lessor’s interests in 709sq m of prime land on Queen St, Auckland CBD, is on offer through CBRE.
The freehold interests in the land, at 176-178 Queen St, 12 Durham St East and 51 & 53 High St, are held under two separate ground leases which are for sale individually or together.
CBRE Auckland Capital Markets brokers Warren Hutt and Jonathan Ogg are marketing the interests for sale by tender closing on 2 December.
Ground lessor’s interests come to the market extremely infrequently, with owners generally holding them as passive, intergenerational assets for the long term, says Hutt.
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“Ground lessor’s interests are so sought after and tightly held that they rarely trade. The limited number of these assets in the Auckland CBD further exacerbates their scarcity.”
Regarded as genuine ‘bottom drawer’ passive investments, the owners of ground lessor’s interests simply hold the titles to the land and collect the ground rent with minimal expenses and very little risk.
Annual ground rent is paid by the ground lessee, who owns the buildings on the site and is responsible for all related expenses including rates, insurance, leasing and building maintenance, Ogg says.
“In the event that the ground lessee fails to meet their rent obligations, the leasehold interests including ownership of the buildings on the site revert to the ground lessor, making ground lessor’s interests extremely secure, consistent and predictable.”
Both leases are on 21-year perpetually renewable terms, with rent reviews every 21 years (except 53 High St, for which rent is reviewed every seven years).
The current lease terms run for the next 12 years, expiring in December 2033, says Hutt.
“With the leases being renewable in perpetuity, there is strong potential for this site to continue providing long term, predictable income for the new ground lessor, as it has done for the current owner,” he says.
“It’s an ideal investment for family trusts and individuals who want a worry-free property holding in the heart of the Auckland CBD.
"With certainty over your returns and zero expenses, it’s arguably the ultimate investment for those wanting to own land and enjoy a superior income compared with other asset classes, with no responsibility or liability for the buildings and their tenants.”
Several buildings on multiple titles occupy the site, with a variety of retail tenants and a small proportion of office space.
With frontages to both Queen St and High St, along with a third frontage on Durham St East, the site is a prime land holding in the heart of the Auckland CBD, Ogg says.
“This is a key location in the core Auckland CBD business and retail precinct – an area where many aspire to own property, but few manage to achieve it.
"With an accessible price range when compared with freehold CBD buildings, we expect this offering to be highly contested.”
With other ground lessor’s interests in the Auckland CBD generally limited to the Britomart, Quay Park and Viaduct areas, there have been few sales of comparable land holdings in the past 10 years, says Hutt.
“These interests are positioned in a highly sought-after Queen St location where property of any type rarely comes to the market. This location, combined with the scarcity and desirability of ground lessor’s interests in general, adds up to a highly appealing package for long-term investors searching for predictable, low-risk assets which generate a superior income.”
- Article supplied by CBRE
