Oyster Group has unconditionally contracted to purchase the Millennium Centre business park at 600-604 Great South Road in Auckland for just over $210 million, at a yield of 7.25 percent, with settlement due at the end of February 2017.
The sale is understood to be New Zealand’s largest ever single office transaction.
The Millennium Centre is a commercial hub of seven office buildings totalling 43,500m² in net lettable area and more than three hectares in site area. It is one of Auckland’s biggest commercial business parks with over 40 businesses, 2,500 people and 1600 on site carparks.
The Centre occupies a prominent position in Greenlane. The site is located in Auckland’s well-established Southern Corridor commercial precinct and benefits from exceptional transport links including easy access to the Auckland motorway network which provides a direct route to the Auckland CBD.
The Business Park comprises pods of buildings on three separate titles being Millennium Centres I, II and III. All are high quality and were developed progressively from 2001 through to 2007.
The Millennium Centre accommodates more than 40 diverse tenants of national and international calibre including American Express International Inc., L’Oreal New Zealand Limited, Chevron New Zealand, Griffin’s Foods, Adidas, Siemens and Toyota Finance New Zealand Limited. The average tenant lease term is five years, which is considered strong for an asset of this size.
Peter Herdson, national director capital markets at Colliers International who brokered the Millennium sale, says the scale of the transaction is significant amongst several other $100 million plus transactions in New Zealand over the last two years.
“Demand for commercial property will continue to be spurred on by domestic economic expansion, balanced supply and demand fundamentals and positive debt to yield spreads. Auckland especially faces unique challenges with its massive projected population growth stretching the city’s resources on all fronts,” says Mr Herdson.
Colliers approached a select group of experienced property investors regarding the Millennium opportunity receiving a number of bids as part of an off market competitive process.
Oyster’s purchase of Millennium closely follows its acquisition and successful syndication of the $97 million Cider building in the central Auckland suburb of Ponsonby earlier this year.
Oyster chief executive officer Mark Schiele says the Millennium purchase is consistent with the company’s strategy of acquiring quality assets in areas of enduring occupier demand.
“Purchasing the Millennium Centre is an important achievement for Oyster as it continues our investment strategy focused on providing superior assets with strong economic rent profiles, to our broad range of investors.
“As a significant commercial hub in Auckland, in a well-connected central location with high quality buildings and diversified income streams, it made long term commercial sense for Oyster to acquire the Millennium Centre.”
Schiele says it is Oyster’s intention to structure the institutional grade property as a multi investor, wholesale investment opportunity.
