Medical centre is an eye-opener
A Tauranga medical centre specialising in eye treatment and daystay surgery and with long leases and substantial income is on the market for sale.
The 960.5sq m freehold centre, at 25 Park St, on the northern outskirts of Tauranga's CBD, generates net yearly income of $420,000 plus GST from two associated medical clinics, which offer ophthalmology services.
On the ground floor, the eye clinic occupies consulting rooms, while the first floor houses the surgery suite and day-stay facilities.
Both long-established tenants have leases with rights of renewal until 2038, and each has exercised second rights of renewal early in anticipation of the property's sale.
The property is marketed for sale by Bayleys Tauranga salespeople Brendon, Lynn and Ryan Bradley in a tender process closing October 24.
Brendon says the mixed-used zoned property will appeal to buyers who want a hands-off long-term hold with security of tenure from the tenants.
“The property is a solid income earner with impressive cashflow,” he said.
The purpose built, two-level medical clinic was developed in 1997 and has an A-grade seismic rating.
The ground floor has consulting offices, two laser rooms, two waiting areas, reception/administration area, and staff facilities. The first floor has a day-stay theatre, which includes two operating theatres, two sluice rooms, duty station, several recovery rooms, office, kitchenette and reception/ waiting area.
The predominantly flat, rectangular site has landscaped grounds that include gardens, hedges and mature trees, plus 34 sealed car parks.
Construction includes concrete foundations and floor, particle board intermediate floor, solid plaster cladding fixed directly over plywood and concrete blocks, aluminum exterior and timber internal joinery and a Kliplok metal roof.
The premises have an average stud height of 2.8m and about 3m in the theatres. Landlord improvements include air-conditioning, an emergency generator, lift and security system.
Ryan says both tenants signed original 10-year leases in 2004, with two six-year rights of renewal and rent reviews initially every two years.
“These leases have since been varied to provide two further six-year rights of renewal with rent reviews every three years from 2020,” he said.
“The April 2020 lease renewals have been exercised and the landlord and tenants have also agreed to the April 2020 rent reviews remaining at the existing rent.
“The next lease renewals are in
2026 and 2032, with the leases finally expiring in 2038 if all rights of renewal are exercised.”
The property is in a sought-after position on the northern side of Park St. “This area is a popular city fringe locality about one kilometre from the CBD and shopping area,” said Lynn.
Park St provides non-metered, onstreet car parking on a restricted duration basis.
“The main characteristics of the area include a mix of professional office premises and residential developments. Major properties close by include the Armitage Hotel, courthouse, police station and the domain,” said Lynn.
“Astute investors will most certainly recognise the strong attributes of this prime northern city fringe location in what has become a strong commercial services sector within close to inner-city services and main roads.”
Tauranga is the fifth most populous urban area of New Zealand, with a 2016 population estimate of 128,000 that is projected to be upwards of
150,000 by 2023, with many more residents requiring medical and professional services.
Along with Auckland and Hamilton, it forms the golden triangle, which generates about 50 per cent of the nation's GDP.