Hospitality, flashpacker accommodation, and residential tenancies&. multiple revenue streams from landmark Wellington CBD building

A seven-storey landmark building at 58-60 Tory Street, Wellington - with strong leases in place to established tenants - is up for sale.

Tenders close on 24 June for Wildlife House - renowned for its vibrant zebra-striped exterior. It features a restaurant on the ground floor, backpacker accommodation over the next five levels, and six penthouse apartments on the seventh floor.

The property is being marketed by Grant Young and Mark Hourigan of Bayleys Wellington, and offers an attractive investment opportunity likely to appeal to a national investor looking for a quality property in a strong location with established tenants and a spread of risk.

“Given the mix of tenancies, the lease structure currently in place - with a net rental of $613,922 per annum – and the potential for growth in market rentals, the property stands out in the current market,” says Young.

Originally constructed as commercial office space, the initial six storeys were built in the 1940’s and renovated in the 1980’s with the Department of Conservation occupying the offices for a long period.

The 480sq m ground floor has recently been fitted out as a quality restaurant, Osteria Del Toro, with a 10 year lease in place from August 2007. With a further 10 year right of renewal and two-yearly rent reviews based on annualised CPI increases, the tenancy currently returns a gross rental of $168,000 per annum.
“The restaurant fit out is quite opulent and with its corner aspect, high studs and large dining area, has quite a presence,” says Young.

Since the late 1990’s, the former office spaces on the first through to sixth floors have been converted to backpacker accommodation and this is now one of Wellington’s largest backpacker operations operating as Wellywood Backpackers.

The establishment has a four-star Qualmark rating and offers 28 dormitories with four to 12 beds in each, along with 13 double/twin rooms featuring ensuites, 13 double rooms, one single room and nine staff rooms.

Communal bathroom facilities are provided on each level, and there are two television lounges, a guest laundry and guest kitchen facilities. The five floors are accessed by two automatic passenger lifts along with two stairwells.

Occupying a total 2185sq m, the Wellywood Backpackers returns a gross rental of $400,000 which automatically rises to $415,000 from April 2010.

The level six penthouse apartments occupy a total 358sq m and range in size from 47.78sq m to 70.08sq m with either one or two bedrooms. Balconies lead off the living areas with glimpses of the harbour obtained from the north-facing apartments. The six apartments currently return around $121,000 in gross rental per annum.

“The current owner manages the residential tenancies himself as part of a larger portfolio and there is very good demand for apartments in this area. They enjoy good sun and whilst there is no on-site parking, there is a purpose-built parking building further along Tory Street, so it’s a pretty convenient place to live,” says Young.

Taking advantage of the premium location, a further $5000 per annum (gross) is achieved through signage on the building. Wildlife House is close to popular entertainment precinct Courtenay Place, Te Papa, the Wellington waterfront and the CBD.