$458m sale of Auckland’s Vero tower ditched: Year’s biggest property deal off

Kiwi Property says it has terminated the contract for the conditional sale of the Vero Centre in downtown Auckland. Photo / Michael Craig

This year’s biggest property sale is off after NZX-listed Kiwi Property Group withdrew from the $458 million sale of its Vero office tower when the Asian buyer failed to proceed with the deal.

“Kiwi Property advises that it has terminated the contract for the conditional sale of the Vero Centre, after the purchaser, a Hong Kong China based conglomerate, failed to meet key terms of the agreement,” it told the stock exchange today.

Clive Mackenzie, chief executive, said Kiwi had “worked hard worked hard over a number of months to successfully complete the transaction and was disappointed by the outcome.

“Despite our best efforts, the purchaser has now missed the deadline for milestones such as paying the deposit and seeking Overseas Investment Office approval for the deal and, as a result, we’ve made the difficult decision to terminate the conditional sale contract,” Mackenzie said.

The company said in May it planned to sell the 38-level tower to the conglomerate.

Then, Mackenzie said: “The Vero Centre has been a prominent feature of our office portfolio for over 20 years. However, it is no longer core to strategy, given the company’s focus on creating retail-led mixed-use centres.

“This transaction is an excellent example of our capital recycling programme in action, enabling us to reduce gearing and unlock a range of new value-creation opportunities.

“Once settled, the funds raised from the sale of the Vero Centre will be used to repay bank debt and then re-invested into other initiatives.”

One investor praised the conditional deal in May, saying it would free up capital for Kiwi to develop other projects including its huge Drury scheme for an entirely new town centre with houses, shops, potentially a hospital and businesses.

“The Vero sale will support higher value-creating moves like that town centre development,” he said.

But that isn’t happening now.

Kiwi is trading around $90c, down only 2.6 per cent annually, giving a market cap of $1.4 billion.

Anne Gibson has been the Herald’s property editor for 24 years, written books and covered property extensively here and overseas.