Council may sell Wall St mall

A new valuation of the Wall St mall has seen it drop $5.8 million in value.
A new valuation of the Wall St mall has seen it drop $5.8 million in value.
The Dunedin City Council's Wall Street mall could soon be on the market as the city gears up to consider asset sales.

Discussion of the mall's future ownership came yesterday, despite a new valuation that saw it drop $5.8 million in value.

The valuation of $29.5 million is lower than the $34 million it cost to build, and down from a $35.3 million valuation last year. 

The drop was partly due to what finance committee chairman Councillor Richard Thomson said was one of the toughest periods for retail, and the highest number of retail space vacancies he could remember.

That economic environment was, in part, behind the lower valuation, as it was partly based on aspects like the ability of the mall to attract high rentals.

The information came to a finance committee yesterday that heard the council's operating deficit was $1.5 million to $5.9 million worse than budget.

Value losses from investment property were part of that, including Wall Street.

The mall, completed in 2009, was built by the council to increase investment returns and influence the look of George St by replacing the rundown Deka building.

In January this year, it was reported the council would consider asset sales as part of a push to accelerate debt repayments and free up its balance sheet.

Council chief executive Dr Sue Bidrose said at the time a study of council assets and the return on investment they provided to ratepayers had begun.

Group chief financial officer Grant McKenzie said a report would come this year with details on the value of all assets within the Dunedin City Holdings Ltd group, including Delta Utility Services, Aurora Energy and City Forests.

It would also include the council's $90 million of investment properties, and the $81 million Waipori Fund.

Mr McKenzie told the committee an Auckland company had been used for valuations, as staff tried to bring ''more rigour to all valuations in council''.

He said after the meeting there was a combination of reasons Wall Street's valuation had gone down, including the retail environment.

''All I can say about the valuation is it has gone through a robust process with valuers that are well known in this field.''

Cr Thomson said selling assets had ''certainly been discussed on a number of occasions''.

Of Wall Street, he said there was ''no question it's making money for council''.

''It's a question of whether you invest it somewhere else you might make more money, or be open to less risk.''

He said there was a will in the council to sell Wall Street.

''I think so. I don't personally understand why we would want to be heavily invested with such a high proportion of our property portfolio in a retail asset, when that's a very specialised kind of retail.

''I'll wait and see what the information tells me, but I'm not sure we have that kind of expertise to remain in the long run.''

Cr Thomson said the valuation reflected the change in the marketplace, something happening across New Zealand.

''That says to me it's not a good place for a council to be. It's better for someone who's a specialist mall operator to take that risk.

''I don't think that's a well-designed mall from a retail perspective, and I suspect a specialist retail operator would probably look at making ... changes. I certainly wouldn't want council to chuck money at making those changes.''

david.loughrey@odt.co.nz

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