Suites Investment Information
Introduction
This page is a brief summary of the documentation for the proposed development to be known as "The Wellington Suites".
This summary is intended to assist purchasers and their advisors in their perusal of the documentation associated with the development. It is not intended to be an exhaustive or binding explanation as to the nature and effect of the documentation and does not form part of any contract.
Full documentation is available via the bulletinboard at Knight Coldicutt's web site, including:
- Ground Lease Document
- Lease Document
Please Contact us for access information.
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The Developer
The Wellington Suiteswill be developed by Wellington Cuba Construction Limited and Wellington Suites Limited (WML) referred to hereafter as "The Wellington". It is part of The Wellington Group of companies.
The Wellington Group is owned equally by Phil McGaveston and Rex Nicholls. Both have a long history of owning and refurbishing older buildings and giving them new economic futures. This site is destined to be a major short term accommodation provider in the heritage/boutique 3½ star range. They are leaders in quality upgrading of upper Cuba Street in advance of the bypass extension/revitalization.
Ownership And Structure Of The Development
The freehold estate in the land is owned by Port Nic Properties Limited. A new ground lease is to be granted to The Wellington on a 98 year perpetually renewable basis with 7 yearly rent reviews, this will be the headlease. The Wellington will grant a sublease on similar terms as their lease (save the necessary clauses for subleases) which will create an individual sub-leasehold title for each individual unit, which in turn will be subject to a Suite Lease to Comfort Hotel Wellington Limited, the entity who will be managing The Comfort Hotel Wellington and The Wellington Suites.
The lease Comfort Hotel Wellington Limited offers provides a minimum 8.25% return on purchase price for the first four years. The Owners of Comfort Hotel Wellington Limited are the same people who have successfully turned around the Comfort Hotel Wellington over the past 14 years, the Comfort Hotel Wellington is a profitable well run operation and the operators have proved that they will be able to provide the returns offered. CB Richard Ellis has provided a letter in support of the ability for the hotel operators to provide such returns.
The Agreement
The agreement is for the sale of a leasehold estate for the suite unit purchased. The agreement is conditional upon The Wellington:
- obtaining a satisfactory level of sales of units;
- obtaining satisfactory resource and building consents;
- obtaining a separate certificate of title for the unit;
- obtaining a certificate of practical completion for the unit.
The agreement requires The Wellington to construct the unit and obtain issue of a separate certificate of title. The purchaser is obliged to pay for the unit on completion and issue of a separate certificate of title and to enter into the Suite Lease prior to settlement date.
Deposit
The total deposit for the purchase of the unit is 15% of the purchase price, payable:
- $5,000.00 immediately on signing the agreement; and
- the balance within 30 days of the date of the agreement.
- The deposit is part of the purchase price and will be held in the trust account of Knight Coldicutt, Barristers and Solicitors.
The Wellington is not entitled to access the deposit until the suite unit is completed and a title has issued for it.
The deposit will be placed in an interest-bearing account. On settlement date the purchaser will receive a credit for the deposit and interest earned on it, less resident withholding tax, stakeholder's commission and bank charges.
Settlement And Possession
The purchaser will have possession of the unit as soon as settlement (payment of the purchase price) is completed. Settlement is the later of five working days after issue of certificates of title and five working days after the practical completion for the unit is provided.
The Lease
Opportunity for long term investment - key points for purchase of a suite unit and lease.
The development has been designed to cater for long-term investors by providing the opportunity to purchase a suite unit subject to an existing commercial lease for suite accommodation. The suite Lease is for an initial term of 10 years with two further terms of 10 years each.
The main features of The Wellington Suite lease are:
- The land lease is a perpetually renewable ground lease with a 98 year term (typically known as a Glasgow Lease). In the ground lease for legal and survey reasons the suite unit is referred to as the "Apartment".
- The suite lease provides for a minimum 8.25% return on purchase price. From year five the lease return is based on 50% of the sum of the gross unit revenue less outgoings, operators costs and the operators fee. Any profit beyond the original 8.25% return is split 50/50 between the unit owner and Comfort Hotel Wellington Limited. Alternatively from year five the unit owners may be able to negotiate a further agreement with Comfort Hotel Wellington Limited.
- The term commences on practical completion of the development;
- The ground rent is reviewed to market rent every 7 years, based on 7.5% of current market value of the land;
- All usual clauses for rent review, dispute resolution etc;
The title may be covenanted so that an owners committee is established to represent the interests of owners pursuant to rent reviews and for other shared interests.
Taxation And Financial
The purchase price is plus Goods and Services Tax. As the purchaser of a suite unit, it is necessary that you will be GST registered prior to the date of practical completion and the title issuing. The transaction will then be zero rated for GST purposes.
No stamp duty is payable on the purchase of the suite units. | 
