An Auckland landmark property has been acquired by leading New Zealand commercial property company, Oyster Group. Oyster has unconditionally contracted to purchase the prominent Cider building on the corner of Williamson Avenue and Pollen Street in the central Auckland suburb of Ponsonby.
The property is being developed by Progressive Enterprises and will encompass a new 4,000m² Countdown Supermarket on a 20-year Lease, 8,000m² of office across three floors, 11 specialty retail tenancies over 900m2 along Williamson Ave and Pollen Street and around 520 onsite basement carparks. Cider will be 100% leased to General Distributors Limited (Countdown), Fairfax NZ Limited (on a 12 year lease) and convenience retail.
This site is unique as one of Auckland’s first real mixed use developments. The neighbouring Vinegar Lane (a tribute to the old DYC vinegar factory which once stood on the site), will not be owned by Oyster but is part of the greater development accommodating a range of occupiers including architects, designers and engineers. It houses high quality apartments on the top floor.
Adrian Walker, Progressive Enterprises’ General Manager of Property, said the sale of the distinctive mixed use site is a great result for the business.
“From the outset, we knew this development would be an attractive offering for buyers given its great location and 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 and lease of this property will allow us to generate capital which we can then reinvest in growing our business.”
Jonathan Ogg, Senior Director of Capital Markets at CBRE who brokered the Cider sale, says the sale of Cider is the largest, city fringe transaction for many years in an area which is 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 and 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 and office markets going forward.”
Mark Schiele, Oyster’s chief executive officer, says the purchase is significant for the company and the multi investor ownership structure will ultimately be the largest which Oyster has created. A total of 50 interests of $1,000,000 each will be made available to wholesale investors only, with a projected pre-tax return of 7.5% per annum. An Information Memorandum will be available to interested investors from April, with shares offered for sale in conjunction with Colliers International.
“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 ground-breaking development project in Auckland, it made good commercial sense for Oyster to acquire the property and to create an investment structure for it.”
Schiele says property ownership structured for wholesale investors continues to be an important part of Oyster’s NZ$800 million property and funds management business, alongside public syndication offers, the company’s recently announced Oyster Direct Property Fund, and management mandates from institutional and private property owners. The Fund will offer investors diversified exposure to $240 million in quality New Zealand commercial property across the retail, office and industrial property sectors, for a minimum investment of $10,000.
Oyster was also recently notified that it is one of the first in the commercial property industry to be granted a Managed Investment Scheme (MIS) licence by the Financial Markets Authority.
Schiele says the requirement for all managers of investment products to be licensed will lift industry standards and improve confidence in markets and outcomes for consumers and investors alike.
“This is a major step up in the regulation of the financial markets. The hurdle to licencing is set high and will weed out those operators who don’t have the skills, staff and robust processes required to be a licenced manager. Ultimately, this can only increase the quality of the managers which remain.”