Oyster’s purchase of Ponsonby’s landmark Cider Building was significant not just because the project was ground breaking on so many levels but also because it was concluded prior to the building being completed.
Progressive Enterprises, the owner of Countdown, had long wanted to locate a supermarket in the central Ponsonby area but finding an appropriate site was extremely difficult.
In the midst of the Global Financial Crisis they purchased a significant landholding from the funders of a then defunct development – colloquially known as ‘Sohole’.
Their plan to open a supermarket tailored to the local demographic needed to be balanced with the type of development which the site both commercially and aesthetically warranted.
The Cider Building is the result – a 13,200m² mixed use retail and office development, encompassing a 4000m² Countdown Supermarket on a 20-year Lease, 8,000m² of office across three floors, 11 specialty retail tenancies over 900m² and around 520 onsite basement carparks.
Progressive Enterprises always planned to divest of the development but given their enduring occupation as the supermarket operator needed a property owner which they could have a long term relationship with. Having purchased a number of Countdown supermarkets, Oyster was a partner that could fit.
The sale was negotiated over the better part of 12 months, and was complicated by the simultaneous development and leasing processes. Oyster and Progressive Enterprises ultimately agreed a purchase structure which was robust enough to allow the parties to declare the purchase unconditional, and for Oyster to raise the equity required for the wholesale investment structure, prior to the building being completed.
In early 2016, Oyster unconditionally purchased the property for approximately $93 million, equating to a yield of 6.74%.
This represented the largest city fringe transaction for many years, in an area demonstrating exceptional growth.
The multi investor ownership structure was, at the time, the largest Oyster had created and a total of 50 interests of $1,000,000 each were then made available and sold to wholesale investors, with a projected pre-tax return of 7.5% per annum.
Cider is unique as an outstanding mixed use development and was extremely well executed by Progressive Enterprises in terms of its design fit in the Ponsonby area. As the iconic property of significant scale was clearly going to be in demand by purchasers on completion, it made sense for Oyster to engage early and secure it prior to development completion. The result was good for both Oyster and Progressive Enterprises.
Cider tenants include Countdown, Fairfax NZ, Biz Dojo, ACG and convenience retail.