A high-quality healthcare building with a government tenant in Napier is being presented to the market for sale, offering buyers the chance to purchase a premium passive investment with development upside at lease expiry due to significant land that is yet to be developed.
The Napier Health Centre, located at 76 Wellesley Road, Napier South offers 4,295sq m of total net lettable area across multiple levels on a 7,171sq m freehold site.
The property is zoned Fringe Commercial under the Napier City Operative District Plan.
Purpose-built in 1999, it is the first comprehensive ambulatory facility in Hawke’s Bay and provides day patient and outpatient services to the population of Napier and its surrounding community.
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The building is fully leased to Health New Zealand – Te Whatu Ora, Te Matau a Māui Hawke's Bay, covering a population of more than 165,000 people.
Having just completed a seismic upgrade on the property, the owners, Vital Healthcare Property Trust, are looking to sell the property to focus on several health precinct development projects across New Zealand.
These include the Royston Hospital in Hastings, the Ormiston Hospital south of Auckland, the complete rebuild of Wakefield Hospital in Wellington, which is over 90 per cent completed, expansion of the Grace Hospital in Tauranga, and the expansion of Endoscopy Auckland.
There is just under 10 years remaining on the current 34-year lease agreement at the subject property that began when the building was opened.
There are two further rights of renewal for six years each, leading to a final expiry of December 2045.
The current net annual passing income from the property, including premises and car parks, is $1,310,362 plus GST and operating expenses.
There are 109 total car parks at the property.
Colliers Directors Richard Kirke, Blair Peterken, Peter Herdson, and Danny Blair have been appointed to market the property for sale via private treaty.
Sitting approximately 800m from the beach and 7km from the Hawke’s Bay Airport, the property is located in the southern part of central Napier.
The building has a central atrium with double-storey height and a wave-shaped steel truss structure supporting the atrium roof.
The ground floor central atrium houses reception, a stairwell to the second level, public waiting space, and an area for children.
Medical clinics are located generally within both wings with circulation corridors connecting all areas.
The second floor is laid out in a more structured format with a range of clinics, offices, and meeting rooms divided by a circulation corridor.
Kirke, International Sales Director of Capital Markets at Colliers, says the attractive lease terms will hold significant appeal for buyers.
“Coupled with the strongest of tenant covenants, the annual CPI reviews that are capped at 5 per cent with the excess carried through to the following year are attractive, with a credit already established following the recent high inflationary period New Zealand has experienced,” Kirke says.
“There are market rental reviews scheduled on renewal, making this a prime passive investment that will grab the attention of astute investors.
“Prospective purchasers with a long-term view may also covet the extensive landholding that could be optimised via a future development on the site.”
Peterken, Director of Capital Markets at Colliers, says key works have been done on the property to improve its resiliency and de-risk the asset, including lease renewal and capex works.
“Last year, seismic upgrades were completed to bring the building up to 70 per cent NBS, while chiller upgrades completed in 2021 have proven an important addition to the property’s overall functionality,” Peterken says.
“The property also has multiple access points, offering convenience to patients and occupants.”
Herdson, National Director of Capital Markets at Colliers, says given the occupant receives funding from the Government, they are a desirable tenant in an area of continued need in New Zealand.
“According to Stats NZ data, between 2022 and 2028, the number of people aged 65-plus will increase by almost 20 per cent, reaching around 1 million people.
"This is projected to reach 1.3 million people by 2040 and around 1.5 million people by the 2050s,” Herdson says.
“New Zealand’s ageing population will add to the demand for healthcare services, underpinning the value of this tenant.”
Blair, Director at Colliers Hawke’s Bay, says properties of this quality with such a strong tenant covenant are seldom seen on the open market in the region.
“This is one of the most attractive passive investments we will bring to the market this year.”
- Supplied by Colliers
