NIB health fund is considering a sale and leaseback of its purpose-built head office at Honeysuckle.
NIB chief executive Mark Fitzgibbon stressed that the sale, if it proceeded, would have no impact on the fund’s customer service operations or 500 employees.
The office, at 22 Honeysuckle Drive, Newcastle, was designed and built in 2008 by the John Holland Group.
NIB declined to say how much it hoped to obtain from a sale but the building was valued in its December half-yearly report at $39.3million.
This value is in line with estimates from Newcastle property experts, who said A-grade office space such as the NIB office was valued for purchase at about $5000a square metre.
With lettable floor space of 8000 square metres, this values the six-storey building at $40million.
Looking at it from a potential landlord’s point of view, a typical rent of about $400 a square metre would return about $3.2million a year, giving a yield of 8per cent on a purchase price of $40million.
As a business tactic, the sale and leaseback of commercial property was popularised in Australia from the 1980s, when the big four banks began selling their bricks-and-mortar branches with leasebacks of five or 10 years with an option to extend.
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Mr Fitzgibbon said NIB had appointed commercial property agents Knight Frank after ‘‘an extensive tender process’’.
Knight Frank would start marketing the building this month.
“The decision to undertake this process follows a strategic review of our asset mix,’’ Mr Fitzgibbon said.
‘‘We believe the ownership of the building ties a large proportion of capital into a single asset and its potential sale will create more diverse investment opportunities for the business.’’
Mr Fitzgibbon said NIB used four floors of the six-storey building. The ground floor was leased to a Juicy Beans Cafe and the first floor was shared by QBE Insurance and State Super.
“We remain committed to maintaining a strong presence in the Hunter, which is why any potential sale will be conditional on a leaseback arrangement of the building for a minimum 10-year period, with the addition of two five-year option periods,” Mr Fitzgibbon said.
Property experts told the Herald that likely buyers would be ‘‘high-net-worth’’ individuals or large property trust funds.
A reputable sharemarket-listed company such as NIB was the most secure type of tenant, after a government department or agency.
NIB shares closed 3¢ up at $3.59 on Wednesday, having risen steadily since the business was demutualised in 2008 at 85¢ a share.
http://www.theherald.com.au/story/3260771/nib-eyes-leaseback-option/?cs=305
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