"Given the annual CPI has been running at in excess of 5 per cent since the last review in July 2010, following the increase in GST, there should be a healthy rental increase awaiting the new owner in two years' time," Hain says.
"All the building's operating expenses, including rates, are 100 per cent payable by the tenant. There is also a tenant redecoration clause in the lease which requires TRN to remedy and repair and undertake maintenance works on the interior of the building every five years.
"It's the ultimate passive investment for an investor looking to take a position in the Auckland CBD now that it appears to be emerging from the bottom of its previous downward cycle."
The building's substantial top three floors comprise of a mix of broadcast studios fitted out with state-of-the-art equipment and offices for support, sales and management functions.
The ground floor has a reception area, lunchroom and storage rooms and also houses 33 covered carparks with direct access to Cook and Nelson Sts.
The building, of concrete-framed construction with glazed curtain-walling on the outside, originally housed Kodak before it was purchased by Radio New Zealand in 1989 on the advice of then board member Sir Robert Jones, whose preference for free-standing, corner buildings with lots of natural light is well known in the industry. In his book ZB - The voice of an iconic radio station, Bill Francis, former station manager of ZB network, recalls that Radio New Zealand's purchase of the building was its biggest capital expenditure ever at the time. "The Kodak building was completely gutted, leaving just the floors, ceiling, pillars and the boiler. The original outside cladding was stone with slits for windows, designed to accommodate a massive photographic laboratory.
"Once the cladding was removed and replaced with glass, some spectacular views were revealed stretching from Birkenhead Point around to Princes Wharf. Radio station 1ZB took over the top floor and the old Kodak cafeteria on April 14, 1990. The glass-tower building is still a distinctive landmark with its bold, cobalt-blue glass facing, stepping down from the projecting corner."
Hain says the building is on a prominent 1497sq m corner site, offering easy access to State Highway 1 and 16 with the junctions for north, south and westbound traffic less than 500m from the property. Nelson St is also one of the city's main northbound arterial roads.
Hain says the property is situated in the CBD's Victoria Quarter precinct which is expected to undergo continuing revitalisation following Telecom's decision to centralise its operations into a new 28,000sq m "campus" in Victoria St West.
The proposed Rhubarb Lane mixed-use residential, retail and office development diagonally across the road from The Radio Network building, encompassing over 2ha of land, would also act as a major catalyst for the area.
"We are currently seeing a drift of new developments west of Queen St and towards the Harbour Bridge with new projects also including AMP Office's Albert St redevelopment for the ANZ, plus ASB's head office complex which is under construction on the waterfront," says Hain. Longer term, the 54 Cook St site has redevelopment potential, with a height allowance of 50m should TRN ever decide to relocate.
TRN It is a wholly owned subsidiary of Australian Radio Network and its shareholders are APN News & Media and Clear Channel Communications.
