Central accommodation units prove popular

The Kingsland properties at 23 McDonald St and 37 Rossmay Terrace. Photo / Supplied

Two freehold former industrial buildings in Kingsland that have been converted to accommodation facilities and which are expected to appeal to private investors, are being offered for sale by Colliers International.

In total, the properties comprise 152 one-bedroom, en suite bathroom units, that returned total annual revenue of $901,282 for the year ending April 2010, based on an average occupancy rate across the two properties of 86.1 per cent.

"These Business 4 zoned properties are being offered for sale as one, but could be sold separately," says Tim Lichtenstein who is marketing them with colleague Andrew Mayne by way of deadline private treaty closing at 4pm on Thursday, June 24.

Lichtenstein said the land, buildings and business were all part of the sale, which had come about due to the owner streamlining its New Zealand investments and rationalising its portfolio to focus on its core business in Australia.

"The successful buyer will find an assured cashflow and a good risk spread with these properties," Lichtenstein said.

"In addition, although there is a strong management structure in place on both properties, there is good potential for revenue growth here through refining the business management and performance."

He said the properties had excellent underlying land and building values and the business would not necessarily require an experienced accommodation provider in order be successful "but rather someone who is prepared to get in amongst it, as a hands-on manager who is willing to roll their sleeves up".

The properties share centralised kitchen and recreational facilities and are overseen by live-in managers. In total 51 carparking spaces are provided on site.

The property at 23 McDonald St occupies a 2342sq m site with 30 carpark spaces and a net lettable area of 1956sq m comprising 93 rooms and the manager's two-bedroom apartment and office.

The unit's occupancy brought in an annual net passing income of $568,862 to the year ended April 30, 2010.

Around the corner, on a neighbouring 1687sq m title, 37 Rossmay Terrace has a net lettable area of 1440sq m with 59 rooms and manager's two bedroom apartment, which provided annual net passing income of $332,420 at the end of April.

Mayne said the economical, shorter-term accommodation, with each room having bathroom facilities but shared kitchen and leisure areas, had proved popular with a broad cross-section of people including students, out-of-town employees on transfer and sports training groups.

"Since the inception of this business model, both of these properties have enjoyed high occupancy rates and strong returns," Mayne said.

He said the current owners had four more properties of this type - three in Auckland, one in Queenstown.

"They have established a sound management structure since acquiring the properties in early 2007 which means that the operation could be run from a distance should the new owner desire a more passive involvement."