Property Divestment

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

246 queen street full

Date of Purchase 16 December 2005
Date of Sale 9 June 2015
Acquisition Price $24,987,950
Sale Price $34,700,000
IRR 11.5%

Countdown, Papakura, Auckland

countdown papakura full

Date of Purchase 15 August 2011
Date of Sale 26 February 2016
Acquisition Price $8,750,000
Sale Price $9,750,000
IRR 11.2%

12 Foreman Road, Hamilton

12 foreman road full

Date of Purchase 12 April 2000
Date of Sale 2 September 2016
Acquisition Price $3,774,000
Sale Price $5,200,000
IRR 13.1%

131 Lincoln Road, Henderson, Auckland

131 lincoln road full

Date of Purchase 18 November 2003
Date of Sale  31 March 2017
Acquisition Price $11,830,000
Sale Price $15,250,000
IRR 9.5%

Unit P, Botany Hub, Auckland

botany hub full

Date of Purchase 17 April 2003
Date of Sale 1 June 2017
Acquisition Price 7,230,000
Sale Price 11,805,000
IRR 14.5%

James Smith Carpark, Wellington

James Smith Car Park full

Date of Purchase 1 May 2004
Date of Sale 12 May 2017
Acquisition Price $21,000,000
Sale Price $18,500,000
IRR 5.0%

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.

Level 18, 55 Shortland Street,
Auckland, New Zealand

P.O. Box 8302, Symonds Street 1150,
Auckland, New Zealand

Phone: +64 9 632 1287
Email : reception@oystergroup.co.nz