Argosy invests in rundown sites

The $33 million that Argosy Property obtained from the sale of two properties will be reinvested into brownfield sites.

The listed property company sold a property in Lower Hutt for $2.6m, and another in St Lukes, Auckland, for $31m.

Argosy chief executive Peter Mence said the company would reinvest the proceeds into old, rundown industrial or commercial properties.

He would not say how many brownfield sites the company had, where they were, or what they planned to do with them.

‘‘We have a number of sites within the portfolio; however, they are strategic and commercially sensitive, so we aren’t willing to disclose details at this time,’’ Mence said.

‘‘In the current environment, developing existing sites is far more attractive from a financial return perspective.’’

The decision to invest in brownfield sites also reflected the growth of Argosy’s existing tenants , and the company needed to provide long-term solutions for them, he said.

Brownfield sites were important to all property players in the industry at the moment, Mence said.

Argosy bought the Gracefield, Lower Hutt, property three years ago for $2.64m, and off-loaded it this year for $2.8m.

Meanwhile, the firm has entered into an unconditional sale of a property on Wagener Place in Auckland’s St Lukes. It sold for $31m, which was 13 per cent higher than book value as at February 28.

‘‘The market for commercial real estate remains attractive for long-term investors divesting real estate. The [St Lukes] sale presents an opportunity to reduce our retail exposure in an area where there will be increasing competition,’’ Mence said.

Settlement of the St Lukes property is expected to occur in July.