Waterfront sites' rent set at $848k

The freehold valuations of land under two office blocks were reduced after factoring in the effect of the Britomart tunnel. Photo / Richard Robinson

A German-headquartered multinational will pay an annual $848,400 to lease Maori land under its buildings near Auckland's waterfront following arbitration to settle a dispute over the rent.

HIH Global Immobilien GMBH & Co Erste Neuseeland KG owns two big Quay Park office blocks on Ngati Whatua o Orakei Maori Trust Board land.

The sites are the subject of a ruling from retired High Court judge Robert Fisher QC.

The German company - one of a number of lessees on 20ha of trust-owned land near Auckland's waterfront - owns GE Money's block at 8 Tangihua St and the BNZ building at 30 Mahuhu Cres and Fisher ruled the land beneath the GE site was worth $9.35 million and the BNZ site $4.79 million.

The freehold valuation of the GE land is $2350/sq m but Fisher cut that back by $82.25 to take account of a drawback, the Britomart tunnel, giving a net rate of $2267.75.

He multiplied that figure by the site's 4124sq m to reach a rounded total value of $9.35 million.

"I determine the current freehold market value of the GE land, disregarding the value and existence of the lessee's improvement, to be $9.35 million as at the review date of August 2, 2011.

"The reviewed rent will be 6 per cent per annum of that figure, namely $561,000 per annum," he wrote.

His calculation for the BNZ site assessed the land value at $2350/sq m, less 4.5 per cent for the Britomart tunnel which cut $105.75 from the valuation, giving a net value of $2244.25/sq m, multiplied by the 2134sq m site to give a rounded total value of $4.79 million.

"I determine the current freehold market value of the BNZ land disregarding the value and existence of the lessee's improvements to be $4.79 million as at the review date of August 2, 2011.

"The reviewed rent will be 6 per cent per annum of that figure, namely $287,400 per annum," Fisher's decision said.

That gives a total annual rent of $848,400 and follows a 15-year rent-free period. Rents, set at an undisclosed rate, became payable around the middle of last year but many lessees objected, leading to the arbitration hearing.

An executive at the headquarters of the German company, Daniel Werth, said the business had agreed to treat details of the Auckland arbitration process discreetly.

When it bought the blocks, HIH said it had invested in two modern, grade A office buildings in the CBD of New Zealand's metropolis.

"The tenants of the new construction properties are General Electric Finance and Insurance, a company of the global conglomerate General Electric as well as the Bank of New Zealand with its subsidiary BNZ Branch Properties Limited which undertakes real estate management in an intra-bank manner," HIH said.

"Both tenants have opted for the central location along the harbour for the next 12 years."

QUAY PARK LAND
* 20ha between Beach Rd and The Strand.
* Lessees challenged Ngati Whatua over rents.
* Arbitration held earlier this year.
* Rulings on two big office blocks.
* New payment terms established.