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CVC property sales return ‘above valuation’

Ashby-Hair-Spa-Website-Advert   Two Clarence Valley Council (CVC) properties were sold for $2.68million at an auction in Sydney on Tuesday August 2. The properties, an office building at Victoria Street, Grafton and a works depot at Bruce Street, Grafton sold for $1.84 million and $840,000 respectively, excluding GST. In a media release, the council’s general manager, Scott Greensill, said both properties were sold to investors and that the “sales were a good outcome for ratepayers and were part of measures the council had introduced to consolidate its footprint and reduce costs”. At the November 2015 council meeting, councillors made the decision to sell nine properties, which were independently valued at $5.305 million. While details of each property’s valuation were confidential; “estimated values” of $1m for Victoria Street and $300,000 for Bruce Street were listed in CVC’s Fit for the Future submission to the Independent Pricing and Regulatory Tribunal. Proceeds of the sales, which are a part of CVC’s “Fit for the Future strategy for property rationalisation, to reduce duplication and operating costs”, will be put towards the construction of a new depot at South Grafton – the council has accepted a $13.185million tender from Hutchinson Builders to construct the depot, including remediation of the site. Grafton real estate agents, First National Ford and Dougherty, handled the sale. Rod Ford, the agent’s principal, said in CVC’s media release that “it was worth holding the auction in Sydney”. “It broadened interest in the sales significantly,” he said. “The Clarence Valley became part of an internationally-based commercial sale process by utilising a local agency, realising they needed the synergy provided by a metropolitan partner. “The above-expectation results of the asset sale are a credit to the trust endorsed by our mayor, Mr Greensill and the fellow directors of the recommendations provided by First National Real Estate Ford & Dougherty.” The sale of the Victoria Street property, described in First National Ford and Dougherty’s marketing information as a “1,410m² commercial zoned (B3) parcel within a high value fringe CBD precinct of Grafton”, includes a guaranteed “five-year leaseback at $210,000pa + GST with two-five year options to Clarence Valley Council as single occupant”. The sale of the 1.177 hectare Bruce Street property, which is zoned R1 General Residential, includes a guaranteed three-year leaseback to CVC at “$82,500 per annum, with two three-year options to Clarence Valley Council as the single occupant”. The leaseback agreements also mean that the tenants, being the council, are responsible for paying the annual rates and charges: $9,320.58 for Victoria Street and $19,123.78 for Bruce Street. Over the primary five- and three-year terms of each lease, the council will pay a total of $1,099,602.90 for Victoria Street and $304,871 for Bruce Street to occupy the sites – or $1,404,473.90 in total. These figures do not include the guaranteed three per cent per annum increase in rental, or the year to year increase in rates and charges. The council’s corporate director, Ashley Lindsay, has previously told the Independent that the lease terms were “based on the real estate agent’s advice”. “The three-year lease period for the Bruce Street depot will enable an orderly exit from the site,” he said. “After the technical staff have been re-located from the Victoria Street office to the new South Grafton depot, the five-year lease period for Victoria Street will enable space for staff to be re-located from Prince Street office temporarily during refurbishment/upgrade of this office.” The Independent emailed several questions to CVC: What was the cost of sales for the two properties [including sales commission]? Mr Greensill said the costs were not yet finalised and that a late report was being prepared for today’s council meeting. Can you outline the advantages to CVC that the fixed term leases will realise, given that the council will outlay a minimum of $1,404,473.90 in lease-back and rates over the initial terms for the two properties? For how long does CVC estimate it will occupy each of the two sites? And: Who were the purchasers of the properties? Mr Greensill declined to directly answer those questions and instead said: “The two properties are under contract. “They have not settled and, until they do, details will remain commercial in confidence. “Council has not asked the purchasers if they want their details made public. “It will be up to them to decide if they want that known.” What is the contracted completion date for the new depot at South Grafton? Works and civil director Troy Anderson said: “This is still being finalised.”