Update regarding proposed sale of Chancery Chambers building – not just an Auckland issue

Earlier this week, ADLS members entitled to vote will have received communications about a Council initiated postal ballot in relation to the proposed sale of the ADLS Chancery Chambers building.

JP

You will remember that, in June/July this year, the ADLS Council went to members for general authority to sell the ADLS Chancery Chambers Building. Only 20% of members voted in relation to that proposal, and the vote did not pass by only 19 votes.

Since then, both I and ADLS Council members have been approached by various members asking what we would look to do in relation to the building next and that, while some supported the sale, they wanted more information, and were not happy with the resolutions as worded.

Some members (many of whom were current tenants) sought media attention on the issue. As a result of that media attention, we have received offers on the building, one of which is an above market offer of $14.9 million (plus GST), unconditional save for ADLS member approval. The purchaser is a respected commercial property landlord with a love of heritage buildings, which has asked that its privacy be protected. You will recollect that our current building valuation is for $13.9 million, and the rateable value is $14 million. ADLS may stay in the building as a tenant, until we locate alternative premises.

Due to the attractiveness of the offer, Council considered itself duty-bound, given the closeness of the vote and feedback from members, to bring the issue back to the membership.

What has changed since we last raised matters with members?

  • There has been some other high-level seismic investigation of the building by potential purchasers since the new MBIE earthquake-prone criteria have been released, which indicates that our 37% IEP rating (which is just above the 34% level) may not be accurate. If a detailed report was carried out and the building was at the earthquake-prone level or below, that would have a detrimental impact on tenants and the ability to re-let. This might necessitate bringing earthquake-strengthening works forward to ensure that the building might be fully let but, while these works were carried out, this would have a significant impact on rental income. ADLS would also have to take on debt and this could have a significant impact on the services we would be able to deliver to members, and could lead to an increase in membership levies. If our building did drop to 34% or below, this would have a significant detrimental impact on our building valuation.
  • We are unable to hold functions for more than 50 people on the roof, leading to members missing out on attending functions. Our ADLS Christmas party needs to be held elsewhere, as the rooftop cannot lawfully hold the necessary numbers of people.
  • The Council is committed to purchasing alternative premises in the CBD and has located some possible premises, for less than the sale price. We have developed our area criteria, and will be seeking to ensure that future premises are fit for purpose to enable more large functions to be held onsite rather than elsewhere. Being able to remain onsite in Chancery Chambers while that happens gives us the security of business as usual until the right premises may be secured.

The Council would ensure that surplus capital was invested prudently, with an investment committee reporting to Council to ensure that capital was preserved for the benefit of members in the future.

Ultimately our role is that of a member organisation – to safeguard and protect the organisation for the benefit of members. Our members are our key asset, with all the contributions that various members make – serving on Committees, delivering CPD, making submissions, and a myriad of other activities.

Chancery Chambers is a beautiful heritage building that is protected by its heritage status as the AA Mutual Building. It will be preserved by any owner as its external appearance may not be changed.

Both I and the ADLS Council want to see ADLS with a permanent home. We see ourselves as stewards for the future of the organisation, and wish to see ADLS continue as a strong force into the future.

This is not just an Auckland issue, but is an issue for all of our members to engage in. We are happy to discuss matters further, and to answer any questions.

This agreement, at this price of $14.9 million (plus GST), and not subject to any due diligence or purchaser terms other than your approval as members, is an excellent opportunity to set up ADLS for success into the future. We look forward to your support.

Members entitled to vote are advised that voting on the proposed sale of the Chancery Chambers building closes at 9.00am on Monday 10 December 2018. Voting under the postal ballot can be done either online or by regular post, as per the instructions in the communications sent out. Voting can be done either electronically (via the link which has been sent to members entitled to vote), or by postal ballot.

Members entitled to vote can also access a dedicated microsite within the voting platform, which contains relevant documentation and background information. The ADLS Council is also holding an information evening at 5.30pm on Wednesday 28 November 2018, which members entitled to vote can attend either in person or remotely, enabling them to ask further questions of the Council and the President. 

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