Whilst the provision of stable, long term returns from quality commercial property remains our key focus, Oyster is also constantly assessing opportunities to crystallise optimal value and return through property divestment. The reasons for considering such sales include near term single tenant expiry risk, abnormal capital expenditure requirements, perpetual vacancy, potential future funding issues and unusually buoyant market conditions.
The vast majority of Oyster assets sold in recent times have provided investors with double digit internal rates of return over many years. These include:
246 Queen Street, Auckland CBD
|Date of Purchase||16 December 2005|
|Date of Sale||9 June 2015|
Countdown, Papakura, Auckland
|Date of Purchase||15 August 2011|
|Date of Sale||26 February 2016|
12 Foreman Road, Hamilton
|Date of Purchase||12 April 2000|
|Date of Sale||2 September 2016|
131 Lincoln Road, Henderson, Auckland
|Date of Purchase||18 November 2003|
|Date of Sale||31 March 2017|
Unit P, Botany Hub, Auckland
|Date of Purchase||17 April 2003|
|Date of Sale||1 June 2017|
James Smith Carpark, Wellington
|Date of Purchase||1 May 2004|
|Date of Sale||12 May 2017|
The sale of James Smiths Car Park in Wellington settled in May 2017, and although this achieved a lower single digit IRR, there was sound reasoning for divestment.
As a result of two large earthquakes which hit Wellington in July 2013, the car park was damaged and closed. The required remedial works were funded via an insurance claim (following payment of the policy excess), and reinstated the car park to the same, relatively low seismic strength, as immediately prior to the event. On completion of the repair works a new lease to Prime Parking was agreed, which also enabled limited investor distributions to re-commence following a 14-month hiatus.
Given the low seismic capacity, strengthening was then proposed and funding options considered.
Unfortunately, another earthquake impacted Wellington in November 2016 and resulted in a further closure due to damage. Given the significant cost to seismically upgrade the building to a market acceptable level, a further insurance claim and rent ceasing under the terms of the lease, achieving a 32% premium to valuation was an optimal outcome for investors.