These lease agreements include an area of 900 sqm in the vacant area on the upper level of the centre to be occupied by Linwood Avenue Medical Centre. Linwood Avenue Medical Centre will relocate from its current location at 279 Linwood Avenue into a new, purpose-built integrated family health centre within a portion of the space vacated by Farmers after the 2011 earthquake. The lease is for an initial term of nine years from the completion of construction.
The lease agreements also include an area of 1200 sqm in the vacant area on the upper level of the centre to be occupied by a cluster of social service providers that will colocate together into new office space in the balance of the area vacated by Farmers. The organisations that will be welcomed include Aviva, Barnardos, Family Help Trust, Red Cross and He Waka Tapu. The lease is for an initial term of six years from the completion of construction and Hawkins Construction has been appointed for the works on the upper level of the centre after a competitive tender process.
Finally, a new standalone Restaurant Brands outlet will be constructed at 283 Linwood Avenue on a site previously occupied by a house demolished earlier this year. The lease is for an initial term of 12 years from the completion of construction.
All three projects will commence in January 2016 with completion in the middle of 2016.
NPT estimates the combined capital expenditure on these projects will be $7 million and will provide an annualised yield on cost of 9.25 per cent. NPT will fund these developments via its existing bank facility.
This investment represents a further step on the path towards NPT’s redevelopment of Eastgate Shopping Centre. It is anticipated that the upper level health and wellbeing services hub will create a large increase in foot traffic that will generate significant, additional sales opportunities for Eastgate retailers. Over the next few years this strategy includes investment in additional food and beverage outlets, larger format retail spaces and other value-adding commercial initiatives.
These developments, combined with the previously announced internalisation of the property management of the portfolio, are expected to add six per cent to the net earnings of the company on an annualised basis.