A New Zealand unlisted commercial property fund has acquired Anderson Lloyd House in Christchurch, paying $27 million representing a 5.45 per cent yield, for the premium post-earthquake CBD office building.
The sale to Tauranga based PMG Property Funds Management Limited was brokered by Mark Macauley, Colliers International investment broker and general manager in Christchurch. PMG also bought the Vodafone building in Tuam Street last year.
Comprising 3,300sq m across six levels, Anderson Lloyd House was built by local developer Amherst Properties and is anchored by blue chip tenants – Mediterranean Shipping Company, Anderson Lloyd and the building’s engineers, Lewis Bradford.
“PMG has a clear set of investment criteria, to which Anderson Lloyd was perfectly suited. It’s positioned in the sought-after West End precinct, which is popular with corporate tenants, close to the Convention Centre Te Pae, has great on-site carparking and was built after the earthquakes,” says Macauley.
“This is exactly the type of quality property that investors are clamouring for. It fits all the investment criteria. Christchurch commercial property attracted considerable attention from national investors last year and we believe that trend will continue in 2021. High calibre properties with top tenants are scarce and, as a result, are keenly contested.
“Covid has done little to slow the market; investors accept that there’s a degree of uncertainty and appear to remain largely bullish, especially against the backdrop of such low term deposit rates.”
Christchurch office vacancy levels are now back to pre-earthquake levels, and the third lowest since Colliers Property Valuation began reporting in 1993. Late last year, Colliers surveyed 265 properties and found 377,777sq m of total CBD office stock, 84.7 per cent of 2010 levels. The West End precinct, along Cambridge Terrace and its immediate surrounds, recorded the lowest vacancy.
Amherst’s Lindsay O’Donnell says he is particularly proud of Anderson Lloyd House, which was the first office block to be approved under the new City Plan following the earthquakes. It went on to win a special merit award at the 2015 Property Council of New Zealand Awards.
“The calibre of the building meant we attracted excellent tenants who were keen to be first movers back into the CBD.”
O’Donnell says he was traditionally a long-term investor, but the building was a mature asset and well-placed for sale.
“I wasn’t actively seeking a buyer given that I’m usually in for the long haul, but the timing was good, and funds released by the sale will allow Amherst to diversify our investments and seek some post Covid opportunities in Christchurch and elsewhere.”
PMG intends to add Anderson Lloyd House to its Pacific Property Fund, which would increase the total value of the fund to circa $380m across 20 properties.
Scott McKenzie, PMG Funds chief executive, says they are excited about the investment opportunities Christchurch’s commercial property sector has to offer PMG’s investors.
Pacific Property Fund will be looking to raise capital in March to help finance the acquisition of Anderson Lloyd House and five other properties. It is currently seeking expressions of interest from investors. Pacific Property Fund is New Zealand’s largest and most diversified unlisted commercial property fund.
On settlement, PMG will own eight Christchurch properties across its five funds.
And McKenzie hasn’t ruled out future investments in the city.
“We’ll be keeping a watchful eye on Christchurch, and the local market fundamentals. As an active and long-term investor, our strategy is to invest in the right properties, in the right locations with a strong mix of quality tenants and for the right reasons. We don’t try to pick the top or bottom of the market.”
“We have been investing in the Christchurch market for some time now and seen it emerge into New Zealand’s most modern city. Thanks to the passion and tenacity of those involved in its rebuild, Christchurch now boasts some of the country’s most modern office developments, attracting high quality, resilient tenants and offering some of the most attractive lease terms.”
PMG has being investing in commercial property for 29 years.