Valuation Information: 21 - 25 Teed Street, Auckland - Sorted ...
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Valuation Information: 21 – 25 Teed Street, Auckland About this document CBRE Limited (CBRE) prepared and issued a valuation report in respect of the property at 21 – 25 Teed Street, Auckland as at 31 July 2021 (Valuation Report). This document comprises: Part A: a letter as at 31 August 2021 issued by CBRE in respect of the Valuation Report; and Part B: a summary of the Valuation Report prepared by CBRE. The information contained in this document has been prepared by CBRE and should be read in conjunction with Fabric Property Limited’s Product Disclosure Statement dated 13 September 2021 (PDS) and other information included on the Offer Register. References to "Stride Office Property Limited" are references to "Fabric Property Limited" (which changed its name from Stride Office Property Limited on 3 September 2021).
Part A: Letter as at 31 August 2021 issued by CBRE in respect of the
Valuation Report
Part B: Summary of the Valuation Report prepared by CBRE
CBRE VALUATION & ADVISORY SERVICES VALUATION REPORT 21-25 TEED STREET N E W M A R K E T, AU C K L A N D C L I E N T: STRIDE OFFICE PROPERTY LIMITED VA LUAT I O N DAT E : 3 1 J U LY 2 0 2 1 © CBRE LIMITED | VALUATION REPORT | PAGE 1 of 57
21-25 TEED STREET, NEWMARKET, AUCKLAND
31 JULY 2021
CONTENTS
1 INTRODUCTION .................................8 5.6 Car Park Rental Analysis .............................. 28
1.1 Instructions ................................................... 8 5.7 Naming & Signage Rights Rental Analysis ..... 29
1.2 Market Value Definition ................................. 8 5.8 Market Rent Assessment ............................... 29
1.3 Industry Practice ............................................ 8 5.9 Sales Evidence ............................................. 30
1.4 Fair Value Definition ..................................... 8 5.10 Key Sales Evidence Commentary .................. 30
1.5 Financial Reporting Standard ......................... 8 5.11 Sales Evidence Conclusion ........................... 35
1.6 Reliance ....................................................... 9 6 VALUATION ...................................... 36
1.7 Information Provided ................................... 10
6.1 Valuation Approaches .................................. 36
1.8 Special Assumptions .................................... 10
6.2 Capitalisation Approach .............................. 36
2 LAND ................................................11 6.3 Discounted Cashflow Approach .................... 37
2.1 Location ..................................................... 11 6.4 Valuation Reconciliation ............................... 40
2.2 Resource Management ................................ 12 6.5 Additional Requirements .............................. 40
2.3 Site Description ........................................... 13 7 DISCLAIMERS .................................... 41
2.4 Legal Description ........................................ 14
8 APPENDICES ..................................... 44
3 IMPROVEMENTS ................................16 Record of Title
3.1 Overview .................................................... 16 Valuation Definitions and Terminology
3.2 Accommodation.......................................... 16 Major Tenant Lease Summaries
3.3 Floor Areas ................................................. 19
3.4 Construction Details .................................... 19
3.5 Interior Finishes........................................... 19
3.6 Services ...................................................... 19
3.7 Capital Expenditure ..................................... 20
4 OCCUPANCY ....................................21
4.1 Tenancy Schedule ....................................... 21
4.2 Lease Commentary ..................................... 21
4.3 Lease Expiry Analysis ................................... 22
4.4 Outgoings .................................................. 22
4.5 Net Income Summary .................................. 23
5 MARKET.............................................24
5.1 Auckland Non-CBD Office Market Commentary
.................................................................. 24
5.2 Office Rental Evidence ................................. 26
5.3 Subject Office Rental Evidence ..................... 26
5.4 Office Rental Evidence Commentary ............ 26
5.5 Retail Rental Evidence .................................. 28
© CBRE LIMITED | VALUATION REPORT | PAGE 2 of 57
21-25 TEED STREET, NEWMARKET, AUCKLAND
31 JULY 2021
Teed Street Frontage
© CBRE LIMITED | VALUATION REPORT | PAGE 3 of 57
21-25 TEED STREET, NEWMARKET, AUCKLAND
31 JULY 2021
VALUATION SUMMARY
This report has been prepared for inclusion within a Product Disclosure Statement and will be uploaded to the
Companies Office Disclosure Register. Accordingly, in the interests of privacy and confidentiality, we have
abbreviated or redacted the following report sections:
• Rental Evidence (Sections 5.2 and 5.5): We have not included full details of the rental evidence considered
in order to protect the privacy requirements of the Lessors and Lessees involved. Notwithstanding, we have
summarised the key comparables and provided market rental ranges.
• Major Tenant Lease Summaries (Appendices): At the request of Stride Office Property Limited, this section
has been redacted to protect the privacy of lessees. Key lease details are summarised in the Tenancy
Schedule on page 21.
Market Value (plus GST if any)
$27,300,000
The above valuation is subject to the Special Assumptions and Disclaimers within this Report.
Key Valuation Metrics
Initial Yield: 6.39% Net Passing Income: $1,745,340 pa
Rate $psm (Excl. Cars): $5,786 psm Net Passing Income (Fully Leased): $1,766,660 pa
Adopted Cap Rate: 5.50% Net Market Income (Effective): $1,608,605 pa
Adopted Target IRR: 6.625% % Over Rented (On Occupied): 9.96%
Adopted Terminal Yield: 5.75% No. of Tenants: 13
Area (NLA): 4,027.2 sqm WALT (Income): 1.74 years
Car Bays: 82 Vacancy Rate: Nil
Key Valuation Assumptions
CPI: 1.92% (10 Yr Avg) Total Adopted Capex (10 yrs): $3,627,184
Office Mkt Rent Growth: 2.23% (10 Yr Avg) Office New Lease Term: 6 years
Retail Mkt Rent Growth: 2.08% (10 Yr Avg) Retail New Lease Term: 6 years
Outgoing Growth: 2.27% (10 Yr Avg) Renewal Probability: 50%
Tenancy Profile by Income Property Risk Profile
$3,000,000 Location Quality
$2,500,000
$2,000,000
$1,500,000
Liquidity Asset Quality
$1,000,000
$500,000
$0
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Lettability Tenant Covenant
Renewal Rent Secured Rent Gross Market Rent (fully leased)
© CBRE LIMITED | VALUATION REPORT | PAGE 4 of 57
21-25 TEED STREET, NEWMARKET, AUCKLAND
31 JULY 2021
Income Breakdown Lease Expiry (by rent)
100%
Coffey Services (NZ) 90%
Limited 80%
30% 21%
Banzpay Technology 70%
Operations Limited 60%
50%
Kingston Property
Limited 40%
30%
Terabyte Interactive
20%
Limited
10%
17% City Rail Link Limited 0%
9%
Other
10% Vacancy Renewals Initial Expiries
13%
Property Description
A 6 level commercial building comprising ground level retail, ground and Level 1 parking and 5 upper office
levels. The building was constructed circa 1986 and has been progressively refurbished to provide good quality
retail and office accommodation. The property occupies a strong location within Newmarket and benefits from
a wide frontage to Teed Street.
Prepared by CBRE Limited
Bradley Unthank, B.Prop, B.Com, MPINZ Cameron Barber, B.Prop
Registered Valuer Valuer
Director
Principal Valuer Valuation & Analysis Assistance
Property Inspected: Yes Property Inspected: Yes
Campbell Stewart, SPINZ, ANZIV, MRICS
Registered Valuer
National Director
Co-Signatory in capacity of Director
The Co-Signing Director confirms having reviewed the valuation methodology and calculations, however the opinion of value expressed has
been arrived at by the Principal Valuer alone.
© CBRE LIMITED | VALUATION REPORT | PAGE 5 of 5721-25 TEED STREET, NEWMARKET, AUCKLAND
31 JULY 2021
SWOT & RISK ANALYSIS
Strengths Weaknesses
◼ The property occupies a central location within ◼ Relatively short WALT of 1.74 years.
Newmarket experiencing strong levels of occupier
◼ Approximately 25% of passing income is from the
demand for both the retail and office areas.
retail component. Market conditions are
◼ Good level of surrounding amenity with the particularly challenging in the retail sector at
Newmarket strip retail precinct a short distance to present.
the east.
◼ The building has a current seismic rating of 50%
◼ The office and retail accommodation is fully leased. NBS, however works are planned to improve this to
at least 67% NBS.
◼ Strong linkages to the Auckland motorway system
and proximate to the Newmarket Railway Station. ◼ Somewhat limited outlook to lower levels.
◼ Good quality office accommodation having been ◼ Despite some recent refurbishment works, the
progressively refurbished. building will require continued capital expenditure
to remain competitive.
◼ Office floor plates of 820 sqm are considered to be
a good size and are easily sub-divided into smaller
tenancies.
◼ 82 car parking bays, reflecting 1 bay per 49 square
metres of lettable area. This is a strong car parking
ratio.
◼ Investment quantum appealing to a range of
purchasers.
Opportunities Threats
◼ Potential redevelopment options over the longer ◼ Office leasing competition from several superior
term. quality developments in Newmarket.
◼ Opportunity to negotiate longer lease terms with ◼ Retail leasing competition from the recently
the monthly retail tenants, improving the overall redeveloped Westfield 277 Newmarket shopping
income risk profile of the asset. centre.
◼ Office and retail vacancy rates have risen markedly
as a result of the economic impacts of COVID-19
combined with new supply. Net effective market
rents have also been affected in some areas.
◼ We refer you to the Market Risk comments below.
© CBRE LIMITED | VALUATION REPORT | PAGE 6 of 5721-25 TEED STREET, NEWMARKET, AUCKLAND 31 JULY 2021 Market Risk Comment Commercial property value growth has been strong in many sectors in recent years, even with the disruption caused by COVID-19 through 2020. This growth is largely due to historically low interest rates, alternative investment markets demonstrating more risk and volatility and low vacancy rates in some sectors (particularly industrial). Prime quality strongly leased property transactions continue to show some yields at historical lows. Notwithstanding currently buoyant conditions in many parts of the property market, the ongoing impact of COVID-19 upon the global economy means that values and incomes may change more rapidly and significantly than during standard market conditions. Should economic and property market conditions deteriorate in the future, then the market value of this asset may decline. This inherent risk factor should be considered in any lending or investment decisions. © CBRE LIMITED | VALUATION REPORT | PAGE 7 of 57
21-25 TEED STREET, NEWMARKET, AUCKLAND
31 JULY 2021
Introduction
1 INTRODUCTION
1.1 INSTRUCTIONS
Instructing Party: Jessica Rod on behalf of Stride Office Property Limited
Purpose of Valuation: Inclusion within a Product Disclosure Statement
Land
Basis of Valuation: Market Value ‘As Is’
Date of Inspection: 5 July 2021
Date of Valuation: 31 July 2021
1.2 MARKET VALUE DEFINITION
Improvements
In accordance with the International Valuation Standards (IVS), the definition of market value is: "The
estimated amount for which an asset or liability should exchange on the valuation date between a willing
buyer and a willing seller in an arm's length transaction, after proper marketing and where the parties had
each acted knowledgeably, prudently and without compulsion."
1.3 INDUSTRY PRACTICE
Occupancy
Subject to the assumptions and qualifications detailed within, this valuation report is issued in accordance
with the ‘Guidance Papers for Valuers & Property Professionals' effective 1 July 2021 and International
Valuation Standards (IVS) effective 31 January 2020. Where these are at variance, the assumptions and
qualifications included within this valuation report will prevail generally, and the International Valuations
Standards will prevail over the ‘Guidance Papers for Valuers & Property Professionals'.
We hereby certify that the Principal Valuer is suitably qualified and authorised to practise as a valuer; does
Market
not have a pecuniary interest, financial or otherwise, that could conflict with the proper valuation of the
property; and accepts instructions to value the property only from the Responsible Entity/Instructing Party.
1.4 FAIR VALUE DEFINITION
We have also had regard to the requirements of the New Zealand Equivalent to International Financial
Reporting Standard 13 (NZ IFRS 13). In particular, we have considered NZ IFRS 13 Fair Value Measurement,
Valuation
which adopts the following definition of Fair Value:
"Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date."
Fair Value under NZ IFRS 13 is generally synonymous with the concept of Market Value under IVS 2017.
Under IVS, the date of valuation is the date at which our opinion of value applies, which in this case is 31
Disclaimers
July 2021. This is different to the date of inspection which is 5 July 2021. Our valuation is on the basis that
there are no material physical changes between the Inspection Date and Date of Valuation.
1.5 FINANCIAL REPORTING STANDARD
The valuation is undertaken in accordance with the requirements of PINZ Valuation and Property Standards
– NZVTIP 2 Valuations for Use in New Zealand Financial Reports. The property is an investment property
Appendices
© CBRE LIMITED | VALUATION REPORT | PAGE 8 of 5721-25 TEED STREET, NEWMARKET, AUCKLAND
31 JULY 2021
Introduction
and the valuer in conducting this report has also observed the requirements of New Zealand International
Accounting Standard 40 – Investment Property (NZ IAS 40).
1.6 RELIANCE
Reliance: This valuation is strictly and only for the use of the following Reliant Parties and
Purposes:
Land
◼ Stride Office Property Limited for inclusion within a Product Disclosure Statement
only.
◼ Due diligence committees established for the purpose of the proposed initial public
offer of shares in SOPL and listing of SOPL on the NZX Main Board (the offer).
For clarity, reliance is not extended to investors in Stride Office Property Limited.
Improvements
The Client acknowledges and agrees that all material or documents created by CBRE
in providing the Services are provided for its benefit and the purposes set out in the
Report and may not be relied on by anyone other than the Reliant Parties. We do not
assume any responsibility or accept any liability in circumstances where this valuation
is relied upon by any Reliant Party after the expiration of 90 days from the date of
valuation, or such earlier date if the Reliant Parties become aware of any factors that
have any effect on the valuation.
Occupancy
Confidentiality: Any valuation service is confidential as between CBRE and the Reliant Party as
specifically stated in the valuation advice/report. Neither the whole of the report, nor
any part of it, may be published in any document, statement, circular or otherwise by
any party other than CBRE, nor in any communication with any third parties, without
the prior written approval of CBRE of the form and context in which it is to appear,
which may be conditional on relevant third parties first executing (i) a reliance letter
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on terms approved by CBRE where the third party wishes to use and/or rely on the
relevant information; or (ii) a non-reliance letter where the third party wishes to use
the report for information purposes only.
Transmission: Only an original valuation report (hard and/or soft copy) received by the Reliant Parties
directly from CBRE without any third party intervention can be relied upon.
Restricted: No responsibility is accepted or assumed to any third party who may use or rely on Valuation
the whole or any part of the content of this valuation.
Copyright: As between CBRE, the Instructing Party and the Reliant Parties, all intellectual property
rights in this Valuation Report are owned by CBRE. Neither the whole nor any part of
the content of this valuation may be published in any document, statement, circular or
otherwise by any party other than CBRE, nor in any communication with any third
party, without the prior written approval from CBRE, and subject to any conditions
Disclaimers
determined by CBRE, including the form and context in which it is to appear.
Appendices
© CBRE LIMITED | VALUATION REPORT | PAGE 9 of 5721-25 TEED STREET, NEWMARKET, AUCKLAND
31 JULY 2021
Introduction
1.7 INFORMATION PROVIDED
We have been provided with the following key information which has been relied upon within our report:
◼ Tenancy Schedule and Lease Documentation provided by Stride.
◼ Outgoings budget for the year ending 31 March 2022 provided by Stride.
◼ Detailed Seismic Assessment Report prepared by Envelope Structural Limited dated 31 May 2021.
Land
◼ Preliminary Budget Estimate for Seismic Work to 25 & 35 Teed Street prepared by WT Partnership dated
24 June 2021.
◼ Technical Due Diligence Report prepared by Cedar Tree Building Consultants dated 28 May 2021.
◼ Asbestos Management Survey Report prepared by Accurate Consulting Limited.
Improvements
Our valuation is undertaken on the basis that provided information is accurate. Should this not be the case,
we reserve the right to amend our valuation.
1.8 SPECIAL ASSUMPTIONS
Assumptions are a necessary part of undertaking valuations. CBRE adopts assumptions for the purpose of
providing valuation advice because some matters are not capable of accurate calculation or fall outside the
scope of our expertise, or our instructions. Assumptions adopted by CBRE will be formulated on the basis
Occupancy
that they could reasonably be expected from a professional and experienced valuer. The Reliant Parties
accept that the valuation contains certain specific assumptions, and acknowledges and accepts the risk that
if any of the assumptions adopted in the valuation are incorrect, then this may have an effect on the
valuation. Refer to the Disclaimers, Limitations and Qualifications Section, which is pertinent to this valuation
report.
Particularly critical to our valuation are the following assumptions:
Market
Seismic A Detailed Seismic Assessment Report provided identifies a Critical Structural
Strength: Weakness, being the roof level cantilever steel columns. Accordingly, the seismic rating
is ~50% NBS(IL2).
We have been advised that the owner intends to seismically strengthen the building to
>67% NBS and the budgeted costs for remediation works are $138,000. Our
Valuation
valuation is prepared on the basis that the remediation costs provided are accurate
and that the subject achieves a seismic rating of no less than 67% NBS on completion.
Disclaimers
Appendices
© CBRE LIMITED | VALUATION REPORT | PAGE 10 of 5721-25 TEED STREET, NEWMARKET, AUCKLAND
31 JULY 2021
Introduction
2 LAND
2.1 LOCATION
Location Map:
Land
Improvements
Occupancy
View the subject property in Google Maps.
Nearest Main Newmarket is a well-established fringe CBD commercial and retail location,
Centre: approximately 4 kilometres south east of the Auckland CBD.
Location & A central position within Newmarket, proximate to the prime retail and pedestrian
Surrounds: areas that are orientated around the Broadway/Remuera Road intersection.
Market
Newmarket is acknowledged as a premier retail strip destination in the Auckland
market, with the majority of major retailers present. The strength of the location has
provided the impetus for ongoing development.
Newmarket is also a well-established fringe CBD office location. This is considered a
strong fringe location, experiencing good occupier demand.
Valuation
Given the central Newmarket location, the subject property is surrounded by low rise
commercial properties with an emphasis on ground level retail or showroom
activities. Located within proximity to the subject is Westfield's 277 Broadway
shopping centre, which has recently been extensively expanded and redeveloped.
Transport Links: Newmarket Railway Station is situated approximately 350 metres to the east of the
subject. The property has good motorway linkages via Gillies Avenue which provides
Disclaimers
access to the northern and north western motorways, whilst access to the southern
motorway is obtained via Khyber Pass Road.
Appendices
© CBRE LIMITED | VALUATION REPORT | PAGE 11 of 5721-25 TEED STREET, NEWMARKET, AUCKLAND
31 JULY 2021
Introduction
2.2 RESOURCE MANAGEMENT
Local Authority Auckland Council, Auckland Unitary Plan Operative in part (15 November 2016).
and Plan:
Zone: Business – Metropolitan Centre Zone
This zone applies to centres located in different sub regional catchments of Auckland.
These centres are second only to the city centre in overall scale and intensity and act
Land
as focal points for community interaction and commercial growth and development
and contain hubs serving high frequency transport.
The zone provides for a wide range of activities including commercial, leisure, high
density residential, tourist, cultural, community and civic services. Zone provisions, in
conjunction with rules in the other business zones, reinforce metropolitan centres as
Improvements
locations for all scales of commercial activity. These centres are identified for growth
and intensification. Expansion of these centres may be appropriate depending on
strategic and local environmental considerations.
Precincts and overlays that modify the underlying zone or have additional provisions
apply to some of the metropolitan centres. Generally, however, to support an intense
level of development, the zone allows for high-rise buildings.
Occupancy
View full details of the relevant zone planning controls.
Indicative The Zone provides for a wide range of permitted activities including office, retail,
Permitted Uses: leisure, high density residential, tourist, cultural, community and civic services.
Key The maximum height of the building must not exceed 72.5 metres unless otherwise
Development specified in the Height Variation Control on the planning maps (see below).
Controls:
If the new building exceeds 32.5 metres in height a minimum setback of 6 metres is
Market
required.
Additional wind requirements apply to any new building exceeding 25 metres in
height.
Additional maximum tower dimension and tower separation controls apply to any
new high rise building. Valuation
Present Use: The present use appears to comply with the underlying zoning.
Site Controls, Natural Heritage: Regionally Significant Volcanic Viewshafts and Height Sensitive
Overlays & Areas Overlay [rcp/dp] – E11 & E12, Mount Eden, Viewshafts
Designations:
◼ The purpose of this is to protect regionally significant views to the Auckland
Disclaimers
maunga. Buildings that intrude into a regionally significant volcanic viewshaft
require restricted discretionary activity consent up to 9 metres in height, beyond
which they are a non-complying activity. According to the planning maps, the
volcanic viewshaft starts at approximately 35.5 metres above the subject site.
Controls: Building Frontage Control – General Commercial Frontage
Controls: Macroinvertebrate Community Index – Urban
Appendices
© CBRE LIMITED | VALUATION REPORT | PAGE 12 of 5721-25 TEED STREET, NEWMARKET, AUCKLAND
31 JULY 2021
Introduction
Development We are not aware of any development approvals currently relating to the site.
Approvals:
Highest and Best The current use is considered to be the highest and best use of the property.
Use:
Heritage Listing: Our online search of Council records did not identify any Heritage issues.
Land
2.3 SITE DESCRIPTION
Improvements
Occupancy
Aerial View Indicative Title Boundaries
Land Area: 2,028 sqm (more or less).
Contour: Relatively level throughout.
Market
Services: All typical municipal services appear to be connected to the site.
Accessibility: Access available via Teed Street.
Valuation
Disclaimers
Appendices
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31 JULY 2021
Introduction
Potential Flooding: The site is bisected by an Overland Flow Path and is identified within a Flood Plain
( ) and a Flood Prone Area ( ).This is depicted on the plan below:
Land
Improvements
Occupancy
Contamination: We have requested site contamination information held within the Environmental
Health Unit of the Licensing and Compliance Services Department, Auckland
Council. The Contaminated Site Enquiry team have advised us that there is no
contamination information held within their records for this site. Of necessity our
valuation assumes that there are no contamination issues that would have a
material effect on the market value, use or marketability of the property which
Market
would prevent the property from continuation of its current use.
We are not environmental experts and we do not know the extent of contamination
(if any). Should subsequent investigations reveal the presence of contaminated
material, we reserve the right to revisit our valuation.
2.4 LEGAL DESCRIPTION Valuation
Identifier Lot Plan Area Registered Owner Tenure
(sqm)
NA65C/273 Lot 1 DP 115150 2,028 Stride Property Limited Fee Simple
Disclaimers
Relevant Interests: Registrations of note include:
◼ Subject to an electricity right (in gross) over part in favour of The Auckland Electric
Power Board created by Transfer C0178813.1
◼ Subject to a light and air, and service rights over part marked F on DP 115150
created by Transfer B796313.2.
Appendices
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31 JULY 2021
Introduction
◼ Subject to a light and air, and service rights over part marked E on Plan 115149
created by Transfer B752977.8.
◼ Subject to a light and air right over part marked D on Plan 115149 created by
Transfer B752977.7.
◼ Subject to a light and air right over part marked C on Plan 115149 created by
Transfer B752977.6.
Land
◼ Some of the easements created by Transfer B752977.3 are subject to Section
309 (1) (a) Local Government Act 1974.
◼ Subject to a right of way and to light and air, and stormwater drainage rights
over part marked A and to light and air right over part marked B on Plan 115149
created by Transfer B752977.3.
Improvements
The above easements regarding the rights of way, light and air easements relates to
a small area situated at the rear of the site, on the boundary with the adjoining
building to the south as depicted in the plan below:
Occupancy
Market
Valuation
We do not consider these easements impact the value of the property in its current
configuration.
Title Search: We refer you to the Appendix for copies of the relevant title documentation.
Disclaimers
Appendices
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31 JULY 2021
Introduction
3 IMPROVEMENTS
3.1 OVERVIEW
Brief Description: A 6 level commercial building comprising ground level retail, ground and Level 1
parking and 5 upper office levels.
Age: Circa 1986.
Land
Condition and Generally good having regard to its age and use.
Repair:
Capital We have been provided with a detailed 10 year capital expenditure schedule, which
Expenditure: we have adopted within our valuation (refer Section 3.7).
Improvements
BWOF: The BWOF sighted during our inspection expired on 17 June 2021. Of necessity,
our valuation is on the basis that the buildings comply with the relevant provisions
of the Building Act 2004. Should this prove to be incorrect, we reserve the right to
review and if necessary amend our valuation findings.
Asbestos: We have received an Asbestos Management Survey Report undertaken by Accurate
Consulting Limited dated 24 November 2017. This report indicates that asbestos
is potentially contained within the following areas with the following risk levels:
Occupancy
◼ Gaskets to pipework flanges – Low to moderate Risk.
Control measures advised are: “Control and monitor”.
The presence of asbestos is still very much prevalent on older buildings throughout
Auckland. This generally does not pose a problem as long as the building is well
maintained. The subject is listed within the report as being maintained in a “Fair”
condition. Extra demolition costs will be incurred if the improvements are removed.
Market
Seismic Comment: A Detailed Seismic Assessment Report provided identifies a Critical Structural
Weakness, being the roof level cantilever steel columns. Accordingly, the seismic
rating is ~50% NBS(IL2).
We have been advised that the owner intends to seismically strengthen the building
to >67% NBS and the budgeted costs for remediation works are $138,000. Our
Valuation
valuation is prepared on the basis that the remediation costs provided are accurate
and that the subject achieves a seismic rating of no less than 67% NBS on
completion. Refer Special Assumptions.
3.2 ACCOMMODATION
Retail Tenancies: The ground level incorporates 5 retail tenancies with frontage to Teed Street that
Disclaimers
range between 92 and 136 sqm in size. The shops have full height retail glazing
to the frontages with a generous stud height towards the frontage and a double
height stud at the rear. Shops 2 & 3 benefit from secondary frontage to the entrance
lobby of the building. The tenancies comprise a mix of plasterboard lined, exposed
or suspended tile ceilings and are provided with air conditioning and lighting. A
canopy extends the length of the Teed Street frontage. Amenities are provided at
Appendices
the ground floor including bathroom facilities.
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31 JULY 2021
Introduction
Land
Upper Levels: Access to the upper office levels is provided via the ground level lift lobby that is
accessed directly from Teed Street. The lobby also provides access to the ground
level parking spaces situated at the rear of the building. It is recessed from the street
frontage and presents to a reasonable standard with ceramic tiling, plasterboard
Improvements
linings, feature lighting and a double height atrium.
The Level 1 office accommodation is essentially a mezzanine area being set behind
the double height retail space. Outlook and natural light are limited with glazing
to the southern elevation only, overlooking the Level 1 parking area. This space has
a lower stud height than the levels above. The western tenancy on Level 1 is utilised
as storage by Coffey Services (NZ) Limited.
Occupancy
Levels 2-5 comprise good quality office accommodation that has been
progressively refurbished in recent years. The levels have a stud height of 2.6 metres
with external glazing extending from approximately 80 centimetres above the floor
level to 30 centimetres below the ceiling where a bulkhead protrudes outwards due
to the bay window configuration.
The tenancies are typically provided with carpet floor coverings, plasterboard lined
Market
walls and suspended ceiling tiles incorporating fluorescent lighting, air conditioning
diffusers and smoke detection systems. Views obtained from the upper levels are
considered to be reasonable with good levels of natural light due to the elongated
floor plates and extensive glazing. Male and female amenities are provided on
each level and present to a good standard.
Valuation
Disclaimers
Appendices
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31 JULY 2021
Introduction
Land
Car Parking: The car parks within the subject building are located on the ground and Level 1.
The ground level parks are situated behind the retail tenancies and are accessed
directly from the Teed Street frontage. They are secured by automated roller doors
at either end of the retail tenancies. The ground level provides approximately 29
Improvements
single parking spaces. The upper level parking spaces are accessed via an ingress
ramp from the eastern side of the frontage and an egress ramp from the western
side of the frontage. Parking to level 1 comprises 32 single parks and 21 triple
stacked parks.
The building provides a total of 82 car parking bays, reflecting 1 bay per 49 sqm
of lettable area.
Occupancy
Market
Floor Plan: The layout of a typical upper level tenancy (Level 4) is illustrated in the following
floor plan:
Valuation
Disclaimers
Appendices
© CBRE LIMITED | VALUATION REPORT | PAGE 18 of 5721-25 TEED STREET, NEWMARKET, AUCKLAND
31 JULY 2021
Introduction
3.3 FLOOR AREAS
LETTABLE AREA ANALYSIS Tenant Lettable % of
Type Area (sqm) Total
Major Tenants
Other Tenants
Coffey Services (NZ) Limited Office 903.5 22.44% 23%
Banzpay Technology Operations Limited Office 818.9 20.33%
Kingston Property Limited Office 541.6 13.45%
Terabyte Interactive Limited Office 373.4 9.27%
City Rail Link Limited Office 445.0 11.05%
Land
Major Tenants 3,082.4 76.54%
Other Tenants
Other Office Tenants 374.7 9.30%
Other Retail Tenants 570.1 14.16%
Other Tenants 944.8 23.46% Major Tenants
77%
Total 4,027.2 100.00%
Improvements
Source: Certified plans.
3.4 CONSTRUCTION DETAILS
Foundations & Concrete slab to ground level and suspended concrete slab to upper levels.
Floors:
Structure: Reinforced concrete column and beam.
Occupancy
External Walls: Aluminium framed glazed curtain wall.
Roof: Unable to inspect.
3.5 INTERIOR FINISHES
Entry Foyer: Ceramic tiling, plasterboard linings, feature lighting and a double height ceiling.
Market
Floors: Typically carpet, tile or polished concrete.
Walls: Mixture of glazed and plasterboard lined internal perimeter walls.
Ceilings: Suspended tile ceilings.
Amenities: Ceramic floor and wall tiles and plasterboard lined ceilings.
Valuation
3.6 SERVICES
Air Conditioning: Central air conditioning system providing air conditioning to the retail and office
tenancies.
Fire Prevention: The building is fitted with smoke detectors, fire hydrants, hose reels and handheld
extinguishers.
Disclaimers
Security/Access Proximity security system for controlled and after-hours access and a CCTV camera
Control: system.
Lifts: Two Kone 900kg 13 person lifts.
Appendices
© CBRE LIMITED | VALUATION REPORT | PAGE 19 of 5721-25 TEED STREET, NEWMARKET, AUCKLAND
31 JULY 2021
Introduction
3.7 CAPITAL EXPENDITURE
Capital Major assets require continual expenditure to maintain the aesthetic appeal,
Expenditure structural integrity, and hence their capital value. We have incorporated a specific
Adopted: capital expenditure allowance throughout the term of our cash flow analysis in
recognition of the requirement for an ongoing refurbishment program.
We have been provided with a Technical Due Diligence Report prepared by Cedar
Land
Tree Building Consultants dated 28 May 2021. This report includes a detailed 10
year capital expenditure schedule which has been adopted within our valuation.
In addition to the budgeted capital expenditure items provided, we have allowed:
◼ Capex escalation based on CPI.
◼ A minimum capital expenditure allowance equivalent to 0.50% of gross income
Improvements
per annum.
◼ An allowance of $200 psm on each office lease expiry and $100 psm on each
retail lease expiry as a general lessor make good allowance, weighted by the
adopted probability of renewal in that year.
Our adopted Capital Expenditure is summarised as follows:
Occupancy
Capital Expenditure Summary Years 1 to 3 Years 4 to 6 Years 7 to 11* Total
Client Advised Programmed General Capital Expenditure
Seismic Remedial Works $138,000 - - $138,000
Structure & Fabric $180,035 $137,146 $264,415 $581,596
Mechanical Services $385,372 $558,134 $479,920 $1,423,425
Electrical Services $244,752 $80,976 - $325,728
Fire Services $13,382 $21,049 $13,824 $48,254
Hydraulic Services $7,000 - - $7,000
Vertical Transport Services $214,919 - - $214,919
Market
Environmental - - - -
NZ Building Code $12,500 $21,335 - $33,835
Total Client Advised Capital Expenditure $1,195,959 $818,640 $758,159 $2,772,758
Refurbishment (on expiring leases) $332,130 $52,011 $435,020 $819,160
General Capital Expenditure Allowance - - $35,266 $35,266
Budgeted CAPEX (incl. Refurb Allowance) $1,195,959 $818,640 $758,159 $2,772,758
Total CAPEX (Adopted Overall) $1,528,089 $870,651 $1,228,445 $3,627,184
Total CAPEX $psm $379.44 $216.19 $305.04 $900.68
% of Adopted Value 5.60% 3.19% 4.50% 13.29%
Valuation
Note: Year 11 represents values included in terminal valuation
Disclaimers
Appendices
© CBRE LIMITED | VALUATION REPORT | PAGE 20 of 5721-25 TEED STREET, NEWMARKET, AUCKLAND
31 JULY 2021
Introduction
4 OCCUPANCY
4.1 TENANCY SCHEDULE
Area Car Base Rent Outgoings Lease Term Start Expiry Review Review
Level/Suite Tenant (sqm) Bays $pa $psm $pa $psm Term (yrs) Date Date Options Date Structure
Office Tenants
Level 5, CO05002 Kingston Property Limited 527.6 - 183,218 347 54,595 103 5.0 31-May-18 31-May-23 6 31-May-23 Expiry
Level 5, CO05001 SNB Finance Holdings Limited 290.9 - 103,393 355 30,106 103 5.2 1-Oct-18 30-Nov-23 4 1-Oct-21 Fixed Ann. 3%
Level 4, CO04001 Coffey Services (NZ) Limited 817.2 - 290,214 355 84,566 103 6.0 1-Jul-18 30-Jun-24 6 1-Jul-22 Fixed Ann. 3%
Level 3, CO03001 Banzpay Technology Operations Limited 168.9 - 54,879 325 17,474 103 10.5 1-Aug-11 31-Jan-22 - 31-Jan-22 Expiry
Level 3, CO03002 Banzpay Technology Operations Limited 650.0 - 211,250 325 67,265 103 10.5 1-Aug-11 31-Jan-22 - 31-Jan-22 Expiry
Level 2, CO02002 City Rail Link Limited 138.6 - 45,745 330 14,816 107 5.0 16-Dec-19 15-Dec-24 2 16-Dec-22 3 Yrly Mkt (Hard Ratchet)
Level 2, CO02003 City Rail Link Limited 306.4 - 101,201 330 32,746 107 5.0 16-Dec-19 15-Dec-24 2 16-Dec-22 3 Yrly Mkt (Hard Ratchet)
Land
Level 2, CO02001 Terabyte Interactive Limited 373.4 - 121,355 325 39,910 107 2.0 1-Oct-20 30-Sep-22 - 1-Oct-21 Expiry
Level 1, CO01001A Wisdom Management Limited 83.8 - 20,112 240 8,672 103 12.5 1-Aug-10 31-Jan-23 - 1-Aug-21 Expiry
Level 1, CO01001B Coffey Services (NZ) Limited 86.4 - 13,736 159 8,936 103 6.0 1-Jul-18 30-Jun-24 6 1-Jul-22 Fixed Ann. 3%
3,443.1 - 1,145,103 333 359,086 104
Retail Tenants
Ground, SS00001 Danny & Alma Chan 107.5 - 73,100 680 10,735 100 12.5 1-Jul-09 31-Dec-21 - 31-Dec-21 Expiry
Ground, SS00002 Darran Mangelsdorf & Erin O'Malley 128.7 - 77,220 600 12,852 100 19.3 1-Sep-02 31-Dec-21 - 31-Dec-21 Expiry
Ground, SS00003 Foresta D'Oro Limited 106.3 - 77,656 731 10,610 100 20.5 1-Nov-02 30-Apr-23 - 1-Nov-21 Ann. CPI
Ground, SS00004 Belloro Fine Jewellery Limited 135.8 - 84,713 624 13,561 100 8.6 1-Jun-13 31-Dec-21 - 31-Dec-21 Expiry
Ground, SS00005 Eyemax Limited 91.8 - 55,104 600 9,171 100 12.0 11-Sep-12 10-Sep-24 - 11-Sep-21 Expiry
570.1 - 367,793 645 56,929 100
Signage Tenants
Naming Rights, NR00001 Coffey Services (NZ) Limited - - 19,669 - - - 6.0 1-Jul-18 30-Jun-24 6 1-Jul-22 Fixed Ann. 3%
Media, MEDIA01 Val Morgan Cinema Advertising (NZ) Limited (VMO) - - - - - - 5.0 1-Sep-18 31-Aug-23 - 1-Sep-21 Expiry
Signage, SIGN001 Vacant - - - - - - - - - Vacant
- - 19,669 - - -
Improvements
Storage Tenants
Level 6, ST06001A Kingston Property Limited 14.0 - 2,756 197 - - 5.0 31-May-18 31-May-23 6 31-May-23 Expiry
Storage, ST06001 Vacant - - - - - - - - - Vacant
14.0 - 2,756 197 - -
Car Parking Tenants
Covered Kingston Property Limited - 7 20,925 57 - - 5.0 31-May-18 31-May-23 6 31-May-23 Expiry
Covered Coffey Services (NZ) Limited - 7 21,239 58 - - 6.0 1-Jul-18 30-Jun-24 6 1-Jul-22 Fixed Ann. 3%
Covered Banzpay Technology Operations Limited - 5 16,900 65 - - 10.5 1-Aug-11 31-Jan-22 - 31-Jan-22 Expiry
Covered Terabyte Interactive Limited - 3 10,140 65 - - 2.0 1-Oct-20 30-Sep-22 - 1-Oct-21 Expiry
Covered Danny & Alma Chan - 2 5,928 57 - - 12.5 1-Jul-09 31-Dec-21 - 31-Dec-21 Expiry
Covered Darran Mangelsdorf & Erin O'Malley - 1 3,120 60 - - 19.3 1-Sep-02 31-Dec-21 - 31-Dec-21 Expiry
Covered Belloro Fine Jewellery Limited - 2 5,741 55 - - 8.6 1-Jun-13 31-Dec-21 - 31-Dec-21 Expiry
Covered Vacant - 2 - - - - - - - Vacant
Uncovered Kingston Property Limited - 5 12,899 50 - - 5.0 31-May-18 31-May-23 6 31-May-23 Expiry
Uncovered Kingston Property Limited - 2 5,160 50 - - 5.0 31-May-18 31-May-23 6 31-May-23 Expiry
Uncovered Coffey Services (NZ) Limited - 8 24,273 58 - - 6.0 1-Jul-18 30-Jun-24 6 1-Jul-22 Fixed Ann. 3%
Uncovered Banzpay Technology Operations Limited - 6 18,720 60 - - 10.5 1-Aug-11 31-Jan-22 - 31-Jan-22 Expiry
Uncovered Terabyte Interactive Limited - 8 24,960 60 - - 2.0 1-Oct-20 30-Sep-22 - 1-Oct-21 Expiry
Uncovered Wisdom Management Limited - 3 7,020 45 - - 12.5 1-Aug-10 31-Jan-23 - 1-Aug-21 Expiry
Uncovered Vacant - - - - - - - - - Vacant
Occupancy
Stacked Kingston Property Limited - 3 6,020 39 - - 5.0 31-May-18 31-May-23 6 31-May-23 2 Yrly Fixed 5%
Stacked Terabyte Interactive Limited - 9 21,060 45 - - 2.0 1-Oct-20 30-Sep-22 - 1-Oct-21 Expiry
Stacked Foresta D'Oro Limited - 3 5,912 38 - - 20.5 1-Nov-02 30-Apr-23 - 1-Nov-21 Ann. CPI
Stacked Vacant - 6 - - - - - - - Vacant
- 82 210,018 49 - -
Total 4,027.2 82 1,745,340 433 416,015 103
4.2 LEASE COMMENTARY
Monthly The leases to Belloro Fine Jewellery Limited, Danny & Alma Chan (t/a Broadway
Tenancies: Blooms) and Darran Mangelsdorf & Erin O'Malley have expired albeit the tenants
remain in occupation. We have been advised that the tenants are currently holding
Market
over on a monthly basis. Our valuation adopts a 6 month lease term for these
monthly tenants.
Outstanding As part of its lease over Level 5, Kingston Property Limited had an option to
Incentives: surrender its lease on the fourth anniversary of the commencement date. The tenant
has not acted on this option and accordingly is entitled to a three month net office
Valuation
rent free period from 1 June 2021 to 30 August 2021. The present value of this
outstanding incentive is $29,964.
Outgoings The leases are structured on a net rental basis, whereby each lessee pays their
Recoveries: proportion of all outgoings expenses, with such proportion calculated by reference
to each tenancy’s lettable area as a percentage of the overall building’s lettable
area.
Disclaimers
Sundry Income: Storage and sundry income are summarised in the tenancy schedule.
Review Rent reviews are a mixture of annual fixed or CPI increases or 3 yearly to market.
Mechanisms:
Appendices
© CBRE LIMITED | VALUATION REPORT | PAGE 21 of 5721-25 TEED STREET, NEWMARKET, AUCKLAND
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Introduction
4.3 LEASE EXPIRY ANALYSIS
Year No. of Net Lettable Area Gross Passing Rent
1,400
Tenants sqm % $ pa %
1,200
Vacant - - - - -
1,000
Year 1 1 819 22.4% 386,489 20.6%
Year 2 4 1,105 30.2% 632,981 33.8% 800
Area (sqm)
Year 3 3 1,194 32.7% 596,132 31.8%
600
Year 4 2 537 14.7% 258,783 13.8%
Year 5 - - - - - 400
Land
Year 6 + - - - - -
200
Total 10 3,655 100.0% 1,874,385 100.0% -
WALT By Area 1.84 years By Income 1.74 years
WALT Comment: A relatively short WALT of 1.74 years.
Improvements
4.4 OUTGOINGS
Item Adopted
$pa $psm
Recoverable Outgoings
Occupancy
Municipal/Council Rates 128,520 32.02
Water and Sewerage Rates 14,940 3.72
Other Statutory Charges 3,860 0.96
Insurance Premiums 25,032 6.24
Air Conditioning/Ventilation 26,572 6.62
Common Area Cleaning 59,176 14.75
Electricity 52,044 12.97
Market
Fire Protection/Public Address 4,892 1.22
Lifts & Escalators 11,200 2.79
Pest Control 315 0.08
Repairs & Maintenance 36,550 9.11
Security/Access Control 11,124 2.77
Gardening/Landscaping 312 0.08
Administration/Management Fee 37,416 9.32 Valuation
Auto Doors (contract) 1,280 0.32
Cleaning (Level 2) 2,782 0.69
Total Statutory Charges 147,320 36.71
Total Operating Expenses 268,695 66.95
Total Outgoings 416,015 103.66
Source: Client outgoings schedule
Disclaimers
Outgoings The outgoings detailed above are within typical market parameters for a property
Comment: of this type, albeit towards the upper end of the range.
Appendices
© CBRE LIMITED | VALUATION REPORT | PAGE 22 of 5721-25 TEED STREET, NEWMARKET, AUCKLAND
31 JULY 2021
Introduction
4.5 NET INCOME SUMMARY
We summarise the property’s net income as follows:
INCOME SUMMARY Area Gross Passing Rent
(sqm) $pa $psm
Rental Income
Coffey Services (NZ) Limited 903.5 462,633 512.02
Land
Banzpay Technology Operations Limited 818.9 386,489 471.98
Kingston Property Limited 541.6 285,574 527.31
Terabyte Interactive Limited 373.4 217,425 582.29
City Rail Link Limited 445.0 194,508 437.11
Total Major Tenants 3,082 1,546,629 501.77
Improvements
Other Income
Other Office Income 375 162,283 433.08
Other Retail Income 570 424,722 745.01
Other Car Parking Income - 27,721 -
Total Other Income 945 614,726 650.63
GROSS INCOME 4,027 2,161,355 536.69
Less Expenses
Occupancy
Statutory Expenses (147,320)
Operating Expenses (268,695)
Total Outgoings Expenses (416,015)
NET INCOME 4,027 1,745,340 433.39
Market
Valuation
Disclaimers
Appendices
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Introduction
5 MARKET
5.1 AUCKLAND NON-CBD OFFICE MARKET COMMENTARY
ABSORPTION, SUPPLY & VACANCY
Land
Improvements
Occupancy
The impacts of COVID-19 on the office occupier market are now becoming apparent. Net absorption for
the Auckland non-CBD was negative 23,900 sqm, in the six months to December 2020 and vacancy
increased to 7.8%. Overall Auckland non-CBD vacancy increased 1.3% in 2020 and is now above the 5
Market
year of 7.4%. Grade A vacancy now sits at 6.3% (up from 5.5% in June 2020), Grade B vacancy is at 9.4%
(up from 6.7% in June 2020) and Grade C vacancy is at 7.7% (up from 6.6% in June 2020).
One of the major characteristics of the Auckland office market since the start of the pandemic has been the
rapid emergence of sublease space options. We have recorded approximately 37,000 sqm of potential
sublease options in the non-CBD market since April 2020 and most notably, approximately 48% of this
space is attributable to Grade A stock. It is important to note that these opportunities are not all immediately Valuation
available spaces. Rather, they often represent occupiers engaging with leasing agents about releasing some
of their spaces onto the sublease market without actively vacating the premises. For this reason, it is
challenging to assess the impact of sublease options on office vacancy.
We have seen approximately 9,250 sqm of new and refurbished office space come to market during the
second half of 2020 with the completion of 55 Corinthian Drive in Albany, a new build in Parnell by Mansons
TCLM and a fully refurbished 13 Blake Street in Ponsonby. We are expecting similar volumes of new supply
Disclaimers
through 2021 with approximately 14,300 sqm of office stock forecast to come to market including a 6,300
sqm refurbishment of 656 Great South Road in Ellerslie by Mansons TCLM.
New Zealand’s success at containing COVID-19 and facilitating a return towards normal levels of activity
across most industry sectors, coupled with significant fiscal and monetary stimulus has led to a more material
bounce back in the economy than previously forecast. Whilst we predict we are nearing a vacancy peak,
Appendices
© CBRE LIMITED | VALUATION REPORT | PAGE 24 of 5721-25 TEED STREET, NEWMARKET, AUCKLAND
31 JULY 2021
Introduction
our forecast is that the economic recovery is unlikely to drive a significant vacancy improvement during
2021-2024 as the expected supply pipeline will likely offset net demand.
RENTS
Auckland Non CBD Office Rents & Yields
310 10.0%
Land
290 9.5%
9.0%
270
8.5%
Rent ($/sqm/annum)
250
8.0%
Improvements
Yield
230
7.5%
210
7.0%
190
6.5%
170 6.0%
150 5.5%
Occupancy
Rent Yield
CBRE Research expanded the suburban basket of properties in Q4 2020 to allow for more detailed reporting
of the performance of non-CBD submarkets. Within the above chart, the overall rent figures for December
2020 reflect the average rents based on the extended basket of evidence while the figures discussed below
Market
reflect the performance of the true “market” change on the basis of the old basket of properties.
The second half of 2020 saw a continued trend of higher incentives being offered, contributing to a decline
in net effective rents in the 12 months to December 2020. Grade A rents have seen a significant contraction
of 4.4% and are currently at $331 psm. Secondary rents have experienced a lesser decline of 1.4% and are
at $249 psm.
Valuation
We expect that rental weakness will extend into 2021 based on weak demand for new completions and
some high quality sublease options undermining recovery. Scaled back supply and healthy economic growth
is forecast to result in reasonably strong rental growth for Grade A and B from 2022 onwards.
YIELDS
The investment market has shown remarkable resilience since the COVID-19 lockdowns. The non-CBD
Disclaimers
office market continues to be characterised by a weight of capital in search of good quality and well leased
properties. CBRE Research indicates that prime CBD office yields firmed by 25 basis points since June 2020
and are currently at 5.75%. Secondary yields have firmed 23 basis points since June 2020 (to 6.36%). On
an annual basis, given some COVID induced yield increases, non CBD office yields are on a par with
December 2019.
We forecast yields will continue to firm through to 2022.
Appendices
© CBRE LIMITED | VALUATION REPORT | PAGE 25 of 5721-25 TEED STREET, NEWMARKET, AUCKLAND
31 JULY 2021
Introduction
5.2 OFFICE RENTAL EVIDENCE
In this version of the Valuation Report, we only provide a summary of the rental evidence considered in order
to protect the privacy requirements of the Lessors and Lessees involved.
In establishing our opinion of market rental for the subject property, we have had regard to recent rental
transactions within the wider market. Net effective office rentals recently achieved within Newmarket and
Grafton show a relatively wide net effective range from $280 psm to $404 psm. Those rentals at the lower
Land
end of the range typically relate to inferior quality accommodation and those towards the upper end are
generally fitted out tenancies.
The most relevant benchmarks indicate a range of approximately $295 - $320 psm.
5.3 SUBJECT OFFICE RENTAL EVIDENCE
Improvements
Recent transactions within the subject property provide the most useful benchmarks for determining the
market rentals applicable as less subjective adjustment is required:
Terabyte Interactive Limited
Level 2: Most recently, Terabyte Interactive Limited agreed to a new 2 year lease over part-
Level 2. The net face rental was agreed at $325 psm over the 373 sqm premises.
Occupancy
After accounting for a lessor provided incentive of 2 months net rent free and a
$10,000 fit out contribution, the net effective rental analyses at $295 psm.
City Rail Link Limited
Level 2: In October 2019, City Rail Link Limited agreed to a new 5 year lease over 445 sqm
of office space on Level 2. The net face rental was agreed at $330 psm, reducing
to a net effective rental of $296 psm after allowing for a 5 month net rental
abatement.
Market
5.4 OFFICE RENTAL EVIDENCE COMMENTARY
109 Carlton Gore Road, Newmarket
Description: 109 Carlton Gore Road comprises a 4,528 sqm, 4 level office building plus
basement car parking situated in a high profile location on Carlton Gore Road. We Valuation
understand that the building was originally constructed in the early 2000’s by
Mansons TCLM, however has been progressively refurbished.
A new lease over Level 3 (1,122 sqm) commenced in April 2021. A new lease was
also agreed in September 2020 over 541 sqm of ground floor office
accommodation. The net rentals are in the vicinity of $300 psm.
Disclaimers
Comparability: Overall comparable.
Appendices
© CBRE LIMITED | VALUATION REPORT | PAGE 26 of 5721-25 TEED STREET, NEWMARKET, AUCKLAND
31 JULY 2021
Introduction
12 Kent Street, Newmarket
Description: 12 Kent Street comprises a 4 level office building featuring 2 ground floor tenancies,
level 1 car parking and 2 levels of office accommodation above. The building was
originally constructed during the 1980’s and presents to a reasonable standard.
In September 2019 a new 3 year lease was agreed over 269 sqm of Level 2. The
net effective rental is in the early $300’s psm. As part of the new lease, we are
Land
aware the premises were refurbished by the lessor, including new carpet tiles to
office areas, new ceiling tiles including LED lighting, and upgrades to the air
conditioning. Lobby and kitchenette areas feature polished concrete finishes and
exposed ceilings.
Comparability: Highly comparable Newmarket location.
Improvements
103 Carlton Gore Road, Newmarket
Description: 103 Carlton Gore Road comprises a 7 level commercial building constructed in
2000 and providing good quality A-Grade office accommodation. The building
features 2 levels of basement parking, ground level office, car parking and entry
Occupancy
foyer and 4 upper office levels.
A recent new lease and lease extension indicate net rentals in the vicinity of $300
psm.
Comparability: Overall comparable quality office accommodation.
Market
107 Carlton Gore Road, Newmarket
Description: 107 Carlton Gore Road is a modern commercial office building which has recently
undergone significant refurbishment works including new lighting, air conditioning
systems, seismic restraints, foyer refurbishments, end of trip facilities, new
bathrooms and lift replacements. The building provides A-Grade office
accommodation with a Green Star rating. Valuation
Housing New Zealand agreed a new lease over the entirety of the building
commencing in March 2020. The lease includes 2% annual increases and a 15
month rent free period.
Comparability: Superior in terms of quality. We are aware that the lease negotiations were
protracted, and we consider that the agreed rental was below market by
Disclaimers
commencement.
60 Khyber Pass Road, Grafton
Description: This is a seven level office building constructed in 1975 which was refurbished in
2010. The top two levels are subject to a new lease with the uppermost level being
Appendices
© CBRE LIMITED | VALUATION REPORT | PAGE 27 of 5721-25 TEED STREET, NEWMARKET, AUCKLAND
31 JULY 2021
Introduction
full refurbished, including new carpet tiles, exposed ceiling and services, LED
lighting, and upgraded HVAC system.
The property is positioned to the northern side of Khyber Pass Road, 150 metres
east of the intersection with Symonds Street and 150 metres west of Grafton Road.
The lease was agreed in April 2020 with a commencement date in April 2021.
Comparability: Superior in terms of quality, however inferior location.
Land
111 Carlton Gore Road, Newmarket
Description: At 111 Carlton Gore Road, we are aware of a sublease over part-Level 2 agreed
in June 2021. The net rental was agreed at the current passing rental. We have
Improvements
been advised that no incentives were provided, however existing fitout is in place.
Comparability: Comparable quality office accommodation.
5.5 RETAIL RENTAL EVIDENCE
Occupancy
In this version of the Valuation Report, we only provide a summary of the rental evidence considered in order
to protect the privacy requirements of the Lessors and Lessees involved.
In establishing our opinion of market rental for the retail tenancies within the subject property, we have had
regard to recent rental transactions within the wider market.
The evidence demonstrates a wide net effective rental range of $376 to $1,220 psm, depending on the
size, location, profile and quality of the premises. The most relevant benchmarks indicate a range of
Market
approximately $550 - $600 psm.
Over the past 10 years, Teed Street has emerged as a sought after retail location in Newmarket.
Notwithstanding, the expansion of the Westfield 277 shopping centre, along with the COVID-19 outbreak
have increased retail vacancy rates in parts of Newmarket and this has also affected market rents.
In August 2018, Eyemax Limited agreed to renew its lease over Shop 5. The rental remained unchanged at
Valuation
$600 psm over the 92 sqm tenancy.
5.6 CAR PARK RENTAL ANALYSIS
The most recent car park leasing transactions within the subject property indicate a rental range of between
$45 and $65 per week.
Covered car parks within comparable buildings have leased for between $45 and $70 per week, however
Disclaimers
the majority of the recent evidence is in the range of $50 - $65 per week.
Considering the most recent leasing transactions in the building, together with our knowledge of comparable
rentals achieved in the surrounding locality, we have adopted a market rental of $60 per week for the single
covered secure car parks, $50 per week for the open car parks and $40 per week for the triple stacked car
parks.
Appendices
© CBRE LIMITED | VALUATION REPORT | PAGE 28 of 57You can also read
