AmTrust sheds NGC House

By Chris Hutching

Friday 21st May 2004

NGC House at 44 The Terrace in Wellington, bought for $19.3 million by listed Kiwi Income Property Trust, was one of 20 properties marketed by American-owned AmTrust Pacific in its attempts to quit its $340 million portfolio in New Zealand.

AmTrust's portfolio comprised commercial and retail properties in the three main centres.

The best ones included NGC House, with 10,000sq m of lettable space and $1.6 million of income after a recent $6.8 million upgrade, and the Triangle Centre, a two-level mall in Christchurch recently sold to a local investor for $14 million.

AmTrust is owned by New York-based brothers Michael and George Karfunkel, who own Manhattan office space and leases on shopping centres in the US. In 1996, they took over the shares in formerly listed Gulf Resources Pacific, after acquiring its bankrupt parent Gulf USA, and since then they have had the portfolio on and off the market.

Colliers International has been marketing the properties locally and overseas and has found buyers for a handful of buildings but not for the whole portfolio.

NGC House is situated next to Unisys House, also recently bought by Kiwi Income from Macquarie Goodman Property for $44 million. NGC House is in Wellington's central city government district, with 13 levels of 10,000sq m. It was built in 1988 and upgraded in 2002.

It is fully leased, with the major tenants being Natural Gas Corporation, the Commerce Commission, the Tertiary Education Commission and the Department of Corrections.

The acquisition price represents a low initial yield of just under 8% but Kiwi Income managers believe they can lift the running yield to more 9% in 18 months because the property is about 10% under rented (below market rates pending rent reviews).

Analysts were neutral about the effect of the acquisition and their outlook for Kiwi Income remains the same the stock's total return will be in line with the industry average over the next 12 months.

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