Ideal aged care site for 127 years advance rent

Elevated view of 2.5 ha undeveloped block of land property for sale at 188 St Johns Rd in Auckland's eastern suburbs

A significant undeveloped block of land described as ideal for a retirement village or aged care facility in St Johns, one of Auckland's affluent eastern suburbs, has come to the market for "sale" - in the form of a pre-paid lengthy ground lease.

The long-term right to use the 2.5 hectare property at 188 St Johns Rd, known to locals as Parsons' Paddock, is being offered for sale by deadline private treaty closing on May 12 through John Schellekens, John Holmes and Brent McGregor of CBRE on behalf of the St John's College Trust Board. Marketing formally commences on Monday April 27.

Schellekens say the purchaser will pay up front for the right to develop and occupy the land for 127 years.

He says the pre-paid long term lease has been offered as providing the right balance between the trust's objectives and a developer's requirement for a suitably long leasehold term to be attractive to the ultimate purchasers of developed product.

"Granting a long-term lease in the proposed form allows the trustees to retain ultimate ownership, given the significance of the land to the Trust and the Anglican Church of Aotearoa, New Zealand and Polynesia, but the arrangement will essentially transfer the benefits of ownership to the lessee for an extremely long time period - significantly longer than the lifespan of most modern buildings and for multiple generations," Schellekens says.

McGregor says pre-paid long term ground lease arrangements are becoming more common in the market with Wynyard Quarter being developed on a similar basis. "Ryman is also developing a retirement village on Ngati Whatua land on the North Shore under a pre-paid leasehold arrangement," he says.

Development opportunities of this scale are seldom, if ever, available in this location, says Schellekens.

"Parsons' Paddock is situated in the heart of the well-established residential catchments of Meadowbank and St Johns, where few comparable land buying opportunities are available, if any. It presents a significant aged care or residential development opportunity within a desirable and affluent suburb - a location that has experienced strong price growth.

"The median house price in the eastern suburbs is $1.2 million. Compounding average house price growth of 14.1 per cent a year over the three year period to December 2014 was recorded in Auckland's eastern suburbs, compared with 9.8 per cent a year for Auckland as a whole."

Holmes says the property offers a well-located, well-serviced, clean and tidy package for a buyer.

The regular, level site has an ideal northerly and westerly aspect, with potential views towards Auckland city and Rangitoto Island. Its main frontage is to St Johns Rd, a major arterial providing access to the Auckland CBD and State Highway One motorway.

It adjoins St Johns College immediately to its east and borders the St Johns Bush Reserve to the north east.

"The site's location close to local amenities, including the Meadowbank Shopping Centre, Eastridge Shopping Centre, Remuera Village and Lunn Avenue, makes it ideal for an aged care development," McGregor says.

"The Remuera Golf Course is also only two kilometres from the property and Auckland's eastern beaches of Mission Bay and Kohimarama are only a 10 minute drive away. "Combined with plenty of bus services and access to the CBD within a 20 minute drive, this is the perfect spot for a retirement village or aged care facility."

The site is also zoned for the Decile 10 St Thomas Primary School and Selwyn College nearby. "These local schools, as well as the suburb's reputation as a safe neighbourhood, make the site a viable option for residential developers," says McGregor.

"The land area includes a 921 sq m section at the rear of the property at 57 Ripon Crescent and the potential for inclusion of a neighbouring 920 sq m section at 55 Ripon Crescent, which could be made available for sale if required.

"These additional sections add significant potential value to Parsons' Paddock, through providing dual street access and wide road frontages to both St Johns Road and Ripon Crescent to the rear," McGregor says.

The site is part of a land parcel originally acquired by Bishop George Augustus Selwyn in 1844 as a site for the St John's Theological College. It was acquired as an endowment to provide income to fund the running costs of the college, which opened on the site later that decade and still operates on the adjoining 6.1ha site.

In 1859, this and other sites purchased by Bishop Selwyn were transferred into the St John's College Trust Board which has continued to fund the operating costs of the College to date.

In later decades, while some sites were sold, others were retained and leased to residential homeowners. Parsons' Paddock has been retained by the trust to date to allow for the expansion of the College of St John the Evangelist, the Anglican Church's residential theological College which occupies the neighbouring site.

Schellekens says that given the changing nature of the way theological education can be delivered and changes to accommodation needs, the land is surplus to requirements and the trustees have decided to convert the asset into an income-generating opportunity to increase distributions which fund the wide education needs of the Anglican Church throughout Aotearoa, New Zealand and Polynesia.

"The ground lease structure being offered, with the purchase price representing pre-payment of all rent for the entire 127 year term, is a transparent arrangement which removes the unknowns associated with rent increases involved with traditional ground leases," he says.