Most Chalmers lessees to take up purchase offer

Port Otago subsidiary Chalmers Properties says the majority of 15 lessees will purchase their freehold titles of industrially-zoned land around central Dunedin, but a small number may yet be advertised for sale.

Chalmers offered the total 3.4ha of land, bounded by Anzac Ave and Harrow and Frederick Sts and under 21 leases to 15 lessees, in mid-August to lessees only, with an estimated sale value of $10 million to $12 million.

Colliers International director Alan McMahon, of Auckland, said the "majority" of lessees had made individual offers, which would be considered by Chalmers' board, with a decision made this month.

He had warned earlier market prices were being sought for the titles, saying last week "only one or two" required further negotiation.

"I expect most sales will be to the lessees at market rates, which on the whole have been [offers] at realistic levels," he said.

Chalmers Properties has underpinned Port Otago's bottom line for several years, significantly contributing to its annual dividend, which has averaged more than $7 million for each of the past six years, but the property downturn has prompted some property values to be downgraded.

Proceeds from the Dunedin sale are going towards a large industrial site in Wiri, Auckland, which Chalmers recently purchased for $11.7 million.

In August 2001, Chalmers sold many of its Dunedin foreshore properties' ground leases for $12.6 million, with two companies owned by Scenic Circle hotelier Earl Hagaman buying at least two-thirds of them and the balance going to Oakwood Properties and the Dunedin City Council.

The sale was contentious because large blocks were sold to big investors as opposed to individual local building owners.

There were a total six land packages covering 23.41ha, with combined rental income at the time of $936,000.

Mr McMahon said last week that as negotiations were still being held with the Dunedin lessees, no blocks were being offered to other parties at present, but it remained a "possibility".

• The land for sale is outside the controversial harbour-side development proposed by the Dunedin City Council, in which Chalmers has a significant interest.

The zoning of that area was changed in mid-2008 from industrial/port to harbour-side, to allow the development of cafes, restaurants and apartments, sparking concern by local businesses of conflicts between neighbours.

simon.hartley@odt.co.nz

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