NZ Post selling buildings with magnetic appeal

New Zealand Post is putting a portfolio of seven of its freehold retail properties up for sale for the first time, with some of them having been owned by the Crown since the 1920s.

"The properties are all in prime, high-profile locations in popular, busy and affluent locations across the North Island," says Peter Herdson, national sales director of Colliers International, who is managing the sale with colleagues Jason Seymour and John Green.

Herdson says the buildings will be sold with New Zealand Post tenancies on new nine-year leases.

"The long-term leases will provide a solid anchor for properties containing tenants which include major trading banks and established retailers. This could be the best offering on the market this year," Herdson says. The closing date for offers is April 30.

NZ Post says it is selling to "focus on re-prioritising capital to invest in growth opportunities".

Herdson says the NZ Post property sale comes as Statistics New Zealand figures show core retailing sales are still marginally increasing,

"With the prime locations and exceptional profile of these properties, they all offer a great opportunity for investors at a manageable investment price range. They are all in strong, stable and secure locations that are consistently popular with tenants and shoppers alike."

Seymour says the properties provide the strong cash flows and prime locations that investors are seeking at a time when the market and buyers are tending towards risk-averse strategies.

"These properties tick all these boxes and help investors minimise their risks by providing well-leased, multi-tenanted buildings."

Green believes retail is the preferred sector for investors who are "starting to dip their toes into the water again".

He says Property Council statistics show retail has outperformed office and industrial as an investment category for more than 10 years - recording an impressive 14.4 per cent annualised total return.

"Investors like the household names as tenants, which indicates strength and reliability," Green says.

Many of the properties are on corner sites in the middle of main retail areas. All are freehold, single or two-level developments in good condition that have attracted a strong mix of high-profile international, national and local branded tenants.

"With New Zealand Post remaining as anchor tenant in each of the sites, they are likely to continue to be surrounded by the A-grade tenants who are attracted to such central locations," Herdson says. "These properties will be magnets for strong tenants."

The property in Paihia, the main town for the Bay of Islands tourist region, is in an ideal waterfront location in the heart of the resort township, which is a focal point for the departure of numerous launch cruises and a main accommodation, dining and hospitality centre.

Situated on the corner of Marsden Rd and Williams Rd, opposite the wharf, the PostShop/Kiwibank is used by thousands of tourists every year as they enter and leave the Bay of Islands.

The single-storey building was erected in 1998 on a 1008sq m site, with four retail tenancies that include the PostShop, Paihia Pharmacy and the base for the popular Dolphin Discoveries. At a total net lettable area of 523sq m the property offers a net current income of $306,241.

In another well-known tourist spot, the NZ Post building at 42-46 Horomatangi St, Taupo, sits on a land area of 2058sq m and is well positioned in the central retail area, with one of the town's highest foot traffic counts.

The large, solidly built, two-level building was redesigned and refurbished in 1999. It has a total net lettable floor area of 1866sq m providing a current net income of $496,600 annually.

Tenants include ANZ Bank, children's fashion company Pumpkin Patch, with several first-floor office tenants and 35sq m of vacant space.

All five remaining properties are in Auckland. Sitting on a prime corner site in the heart of fashionable Parnell Village, the NZ Post building at 295-303 Parnell Rd is a modern retail and office development on three levels sitting on an 857sq m site.

Designed by Jasmax architects, it was completed in 1997. With harbour views, the building provides secure basement parking, ground-level retail and first-floor office space.

Other tenants include the Parnell Pharmacy and Dunk Cafe, with Paramount Pictures as the first-floor office tenant.

Herdson says the net current income of $405,286 has the potential to be increased to $505,955 by leasing up the recently vacated ground floor tenancy situated on the high-profile corner of Parnell Rd and Gibraltar Cres.

With a total lettable area of 1134sq m and 34 basement car-parking spaces, it is a significant stand-alone building compared with many of its neighbours.

In the eastern suburbs, at the nub of the affluent seaside suburb of St Heliers, the NZ Post property at 16-20 St Heliers Bay Rd occupies a prominent central position with the local community.

St Heliers has retained a strong village atmosphere centred on its library and post office, and offers a desirable lifestyle due to the rejuvenation of its beach, high-quality restaurants and several regular beachside events such as the Stroke & Stride series and the Round the Bays walk/run.

The property is a two-level retail and office building, built around 1980 on a 911sq m plot. The ground floor is home to the PostShop/Kiwibank and bakery franchise Bakers Delight. The first-floor offices are leased to a local law firm.

With a total net lettable area of about 882sq m, Herdson says the property offers a current net income of $248,405 with a potential to increase to $299,404.

This NZ Post tenancy also offers the advantage of dual street access, with St Heliers Bay Rd at the front and Turua St at the rear.

On a busy corner in upmarket Remuera, the NZ Post building occupies a 2319sq m site on the corner of Victoria Ave and Remuera Rd.

"This NZ Post building has the biggest land area of all of the properties currently for sale and is situated on a main arterial road on possibly the best commercial corner site in Remuera," Herdson says.

The property accommodates seven tenancies including a National Bank and ASB Bank.

Built over two floors, it was refurbished and extended in 1990 and now has a total net lettable area of around 1785sq m.

Car parking is provided on two levels at the back of the property.

Herdson says the building benefits from a strong rental profile in a well-established and wealthy suburb with a current net income of $811,477 "that should increase to $851,792 when fully let".

The NZ Post building at 3062 Great North Rd sits on a well-known corner site in New Lynn and comprises a single-level structure built in 1997 and rooftop car parking.

The property is fully leased to four tenants, including ANZ Bank. Bunga Raya, one of the other two tenants, was recently voted Auckland's best Malaysian restaurant by the Herald's Viva magazine.

The property has a current net income of $366,202 from its 1315sq m lettable area.

The final property is a waterfront site in the heart of Browns Bay, at 55 Clyde Rd on the North Shore.

The property is a two-level 1980s commercial development sitting on 852sq m and was extensively altered and redeveloped in 1992-1993.

Two tenants occupy the ground-floor space fronting Clyde Rd - AMI Insurance and Restaurant Brands, operators of the New Zealand outlets KFC, Pizza Hut and Starbucks Coffee.

The Post Shop/Kiwibank area faces the pedestrian mall and there is a restaurant and function centre on the floor above. In all, the current net income for the property is $343,468.

Seymour says Colliers expects the properties to attract mainly New Zealand interests including family trusts, corporate interests and private syndicates.

"Low bank deposit rates are encouraging the re-emergence of syndication," says Seymour.

"However, interest is also expected from Australia and Asia, given the weak New Zealand dollar and low-interest-rate environments in countries across Asia."

Colliers also cites the presence of Kiwibank branches within the PostShops as a factor in generating interest in these properties.

"In the half-year to December 2008, Kiwibank continued to perform strongly and grow its customer base," says Herdson.

New Zealand Post has operated since 1840, becoming a state-owned enterprise in 1987.

More than 700,000 people visit PostShop/Kiwibanks each week with over 30 million financial transactions made in PostShops each year, from car registrations to paying phone and power bills.

About 17,000 New Zealanders work for NZ Post in some way within a network of more than 300 PostShop/Kiwibanks and more than 600 Post-Centres across the country.