Return maximised through clever repositioning: 46 Spring Street, Tauranga
10 April 2017
Originally purchased in 1999 for $4.6m (with a net return to investors of 9.5% per annum) 46 Spring Street, in Tauranga, is a multi-tenanted office and retail building in the heart of the CBD.
Following the Christchurch earthquakes, in 2014 a full seismic assessment was carried out indicating that half of the building rated below 34% of the New Building Standard (NBS). PMG CEO, Scott McKenzie, said the valuation of the property was noticeably impacted in the short term.
“Concerningly for us and our investors, the value of 46 Spring Street dropped (temporarily) to a similar value at which it was purchased for 15 years earlier,” says Scott.
A seismic upgrade of the property commenced which saw tenants being moved around the building throughout the project, supported by a strategic leasing programme to achieve 100% occupancy on completion. “We were very conscious of the disruption this type of upgrade can have on tenants’ businesses,” said Scott. “So we worked tirelessly to provide short term alternative spaces within the building, which was suitable for our existing tenants during the project.”
The Bottom Line:
Since the upgrade was completed PMG has secured two major new tenants in 46 Spring Street, BNZ and Tauranga City Council. The building is now 100% occupied and is well placed to provide ongoing returns for investors for years to come.
46 Spring Street was recently sold to Pacific Property Fund Limited for $10.3 million. Existing investors in the property achieved a total aggregate return in excess of 100% of their original investment.
Please click here to read further into the Pacific Property Fund Limited, and what opportunities await.