Wellington landmark's sale just shy of $26.3m valuation

One of this year's largest property sales has gone ahead - but to another buyer.

Kiwi Income Property Trust's sale of BP House on Customhouse Quay for $26 million was Wellington's second-largest deal this year.

Chris Gudgeon, Kiwi Income Properties' chief executive, said the buyer had nominated another party to settle the deal and the building had sold for $300,000 under its market valuation.

On March 30, Kiwi Income announced the sale of the building for $26 million, representing a passing yield of approximately 7.3 per cent on net contract income.

"The valuation at this time was $26.3 million. The sale was subject to a first right of refusal in favour of BP Oil New Zealand Ltd to acquire the property upon the same terms and BP had a three-month period in which to exercise this first right of refusal. They did not exercise this right.

"The original purchaser paid a deposit and had the right to nominate another party to complete the sale under the same terms and conditions prior to settlement.

The original purchaser exercised this right and nominated another party. This other party settled the sale for the original purchase price of $26 million early this month and we announced settlement of the sale to the NZX on August 4.

"It is interesting to note that BP went back out to the market to canvass interest in acquiring the property through its pre-emptive rights, providing the opportunity for another purchaser prepared to pay more for the building to acquire the asset. Nothing happened as a result of this process.

"The sale went through at the original $26 million purchase price, but with the original purchaser nominating another party to complete settlement at the original purchase price," Gudgeon said.

"We have always said we were happy with the sale price received which was within 1.1 per cent of valuation."