Aged care facility with long lease and redevelopment potential
Colliers International has been exclusively appointed to market 27 McLean Street, Tauranga, for sale by deadline private treaty closing at 4pm on Thursday 17 October, unless it sells earlier.
The property comprises an approximately 1,700sq m aged care facility on a 3,231sq m corner site with favourable City Living zoning.
It is being sold by an entity related to established tenant Aspen Lifecare Limited, which will commence a new seven-year lease from 1 October 2019.
Simon Clark, Managing Director of Colliers International in Tauranga, says the property would make an excellent long-term hold for an astute buyer.
“This is a unique opportunity to acquire a substantial land investment with long-term rental income and future potential for redevelopment or capital gains.
“Located on a huge corner site with excellent proximity to Tauranga’s CBD, the property offers substantial improvements that have been well maintained and have an A-grade seismic rating.
“The buildings are leased on a long-term basis to a very experienced operator who has owned and managed facilities like this for decades.
“The lease returns $474,000 net per annum, plus GST and outgoings, with CPI rent reviews every two years.
“A single right of renewal of seven years extends the final lease expiry to September 2033, but there is the option for a new owner to cancel the lease well before this final expiry.
“Such a large strategic landholding rarely comes available, especially with such strong positive cash returns.”
Grant White of Colliers Tauranga says the buildings were mostly developed in the 1980s.
“The property comprises a 57-bed elderly care facility with an on-site kitchen and laundry to cater for permanent guests. The rooms are divided between a 40-bed hospital and a 17-bed rest home.
“The buildings are up to three stories high on the elevated site, with most of the bedrooms being situated on the upper level which covers the length of the site.”
White says the property is superbly located at the fringe of Tauranga’s CBD.
“It is surrounded by a mix of housing and offices on the northern side, and the Clarence Hotel and Restaurant and the McLean House office building on the southern side.
“The location already has elevated views over the city and the harbour which can be further enhanced by developing much taller buildings on site.
“Any future occupiers will have ease of access to the CBD which offers an attractive mix of professional services, offices, retail and The Strand hospitality precinct.”
The property’s City Living zoning allows for mixed-use residential development of up to 13m in height.
However, more intensive development could potentially be possible, given the site’s position on the northern boundary of Tauranga’s CBD.
The other side of McLean Street is zoned City Centre, which will allow buildings up to 48m height.
White says the vendors have received professional planning advice that the council may consider a development of 25m to 28m in height on the site.
“However, we advise purchasers to seek their own professional advice on what they can and cannot do on the site.”
White says the vendors and associated parties also own adjoining sites, allowing a new owner to potentially expand their landholding by up to an additional 3,142sq m.
“The vendors own a three-bedroom house on a 708sq m site at the rear off the property, accessed off McLean Street, which is currently occupied by staff.
“One of the owners and other associated parties also own an 809sq m site on the corner of Willow Street and Monmouth Street.
“There are also several properties on the northern boundary that can also be purchased. This provides scope to potentially expand what is already a substantial strategic landholding.”