Unlocking optimal returns for investors at 131 Lincoln Road

Oyster took the opportunity to maximise optimum returns for investors by divesting a well-located asset with significant potential. This decision came after years of solid returns and the realisation that capital investment would be necessary to address a long-term vacancy.

Investment highlights

• Sold in 2017 after 14 years, delivering a total return of 130.9 per cent for investors
• Annual capital returns of 2.1 per cent
• Annual income returns of 7.7 per cent
• Annual total return of 9.7 per cent

A strong proposition

131 Lincoln Road was added to Oyster Property Group’s property portfolio in 2003, an asset in a prime location with excellent on-site amenities and with a broad range of tenants.

The property benefited from high levels of exposure along one of the busiest arterial roads in West Auckland. It also had convenient access to motorways, public transport links and on-site parking. Situated within the busy commercial centre was a GAS petrol station, McDonald’s restaurant and a medical centre, with additional office and retail space to the rear of the site.

“The Lincoln Road asset ticked a lot of boxes for us,” Oyster’s General Manager – Investment, Steven Harris said.

“With its ideal location and offering a strong leasing proposition to tenants, we could see that our investors stood to benefit from a diverse tenant profile.”

131 Lincoln Road delivered significant value with an annual income return of 7.7 per cent to investors.

“That’s a result that we’re really proud of,” Harris said. “It speaks to the team’s ability to identify assets that will attract quality tenants and ultimately, deliver for our investors.”

A fork in the road

Despite concentrated leasing efforts a level one office vacancy endured, driven by an oversupply of office space in the immediate area and tenant relocations to new developments in the Westgate area, which was providing new office space at compelling rates.

Significant capital expenditure and leasing cost was going to be needed to lease the nearly 1,900sqm of vacant space.

Despite the state of the leasing market, the investment sale market was experiencing a period of strong growth and demand, and an opportunity to crystallise optimum returns for our investors through a sale presented.

Results that speak for themselves

The well-timed sale of 131 Lincoln Road enabled Oyster to crystallise asset growth for investors by mitigating the need for additional expenditure and capitalising on the two new lease terms.

The property sold in 2017 for a sum $940,000 above its valuation, delivering a total return of 130.9 per cent to investors.