Global investors in mix for hostel
The sale of a central Wellington tower housing a large student accommodation complex is tipped to grab the attention of national and international investors.
Cumberland House on Willis St is home to a 227-room multi-storey hall of residence run by Te Herenga Waka–Victoria University of Wellington. The university has been the anchor tenant for over a decade with 13 years remaining on the current lease.
With views over the city and just a short walk from the university’s city campuses, the hall is particularly popular with first-year students and design and architecture students at the nearby Te Aro campus.
The fully leased mixed-use property comprises a 12-storey tower on Willis St and adjoining four-level parking building fronting Victoria St.
In addition to the hostel, it encompasses a ground-floor tenancy recently leased for a new indoor boulder climbing facility, a basement workshop/warehouse occupied by Avis Rent A Car and more than 60 carparks on monthly leases.
The property returns total annual net rent of $2,193,284 plus outgoings and GST, around two-thirds from the hostel.
Bayleys salesperson Fraser Press said investments of this scale and quality were sought-after worldwide.
“The presence of three separate tenants plus carpark revenue provides an attractive split-risk profile and diversified income.
“Having had Victoria University of Wellington in occupation for over 10 years and committed to another 13 years is testament to demand for this form of accommodation, which is increasingly viewed globally as a commercial property investment class in its own right. The prospect of ongoing recovery in international student numbers is likely to add further to demand.
“A new seven-year lease to Avis further enhances the tenant profile, while the recent leasing of a substantial ground-floor office/ showroom tenancy on Willis St to indoor rock-climbing operator Hangdog for a sixyear term is an innovative addition to the tenant mix.
“The three lease agreements also provide for substantial further rights of renewal,” said Press.
The freehold land and buildings at 237 Willis St and 184 Victoria St are being marketed through Press and colleagues Grant Young and Mark Walker of Bayleys Wellington. Sale is by tender closing on Wednesday, October 25.
Young said the Willis St tower of approximately 7187sq m and the approximately
2146sq m, four-level parking building on Victoria St sat on a site spanning more than
2600sq m.
Originally designed in 1969, the property has evolved over the years. The hostel underwent partial refurbishments in the mid to late 2000s and more comprehensive renovations in 2012-13.
“The main tower spans 12 levels and boasts a diverse range of accommodation options, including self-catering studios and studios that share communal bathroom and kitchen facilities.
“The ground floor encompasses a welcoming lobby, communal dining area and commercial kitchen. Mezzanine offices and a first-floor laundry and common area provide additional functionality and comfort to occupants,” Young said.
The Willis St tower and Victoria St parking building have seismic ratings of 70 per cent (2023 report) and 67 per cent (2021 report) NBS respectively.
“The underlying site is a substantial and prominent strategic landholding in the heart of Te Aro,” he said.