$3.4m profit in embassy deal
In a deal that might be one of Wellington’s greatest land flicks, a developer is understood to have made a $3.4 million profit on a tiny sliver of former Crown land.
The buyer was the United States embassy, which has confirmed it bought the 644 sqm site late last year.
But an embassy spokeswoman would not confirm how much the US State Department paid to acquire the land, which borders the embassy compound in Murphy St.
It’s understood Wellington property developers Graeme Cromie and Peter Savage have cashed in to the tune of $5m, after paying $1.6m to local iwi for the site, and then on-selling it in what looks to be a single transaction.
While the US embassy would not comment on the details, a spokeswoman said security concerns were at the centre of the purchase in November last year.
That was because of a proposal to build a block of apartments on the land, that would have been extremely close to the embassy. Cromie and Savage had not applied for resource consent when they showed the embassy their plans, and it’s not clear whether they would have received it had the embassy registered any objection.
But both parties had come to an accord that industry sources say would have taken into account both the land cost and development margin.
Plans were drawn up to build three-storey apartments but they would not have been high rises, Cromie said.
‘‘We informed the embassy about what we were doing and they didn’t like the idea . . . they offered to buy it ... we gave them a price.
‘‘You go to the neighbours to February 19: Iwi right of first refusal registered with LINZ.
May 10: Port Nicholson Block Settlement Trust accept right of first refusal.
November 20: $1.4m iwi/Crown agreement settled.
November 20: Transfer to Commercial Properties directors, Graeme Cromie and Peter Savage. November 20: Transfer to The Government of the United States of America.
see what their attitude is to building adjacent to them would have been. They [the embassy] suggested they would rather not have apartments on that boundary.’’
The embassy spokeswoman suggested a fair price was reached.
‘‘As is always the case in this kind of transaction, each of the parties determines what the property is worth to them.’’
The embassy was planning how to incorporate the land into its compound.
The embassy had originally leased the land for several years from its original owners, the New Zealand Transport Agency (NZTA).
However, NZTA had decided it no longer needed to hold on to the site for the public works purpose for which it was held: ‘‘better utilisation for the Wellington Urban Motorway’’.
Under the rules of disposing of Crown Land, the agency was required to give the relevant iwi ‘‘first right of refusal’’ to the land.
The Port Nicholson Block Settlement Trust, which represents several Wellington iwi, accepted and paid $1.4m for it.
NZTA appears to have offered the land up for first right of refusal on February 19, last year.
However records show the transfer of the land between all three parties – the trust, the developers, and the embassy – at precisely the same time: 2.18pm on November 20.