Purchasing 135 Albert Street and making it the council’s corporate base remains a sound decision, based on expert advice, perfectly robust due diligence work and a successful move of staff to a new CBD location.
In late 2011 the council faced an accommodation turning point. CBD-based staff were located in leased buildings scattered around the city – costing money in both rent and lost productivity (constantly travelling between buildings).
The then-Chief Executive was tasked with finding a solution to the organisation’s accommodation needs. He worked with Auckland Council Property Limited (ACPL), which managed property acquisitions for Auckland Council, to find and negotiate an appropriate new home.
Carrying out pre-purchase due diligence
This has been called a ‘limited visual assessment’ to differentiate it from a more invasive approach of removing parts of the building, as in the case of 135 Albert Street.
This does not mean that the expert consultants simply took a quick look at the building. In fact, they put cameras behind cladding and used their engineering expertise to assess any degradation; they reinstated the building’s maintenance unit and inspected up one full side of the 29 storey tower; they looked extensively at the more easily accessible lower levels; they reviewed the architectural drawings and spoke to the architects and other parties involved in the original construction.
All of this is an accepted method of due diligence, adding context to confirm what the experts had observed.
It is also important to remember that the building was fully occupied and we couldn’t simply start taking it apart or drilling into it.
The role of the ACPL
The recommendation was made by staff (ACPL and Auckland Council), who were experts in property acquisition, to the Auckland Council Chief Executive. The ACPL Board was provided brief updates as part of general work programme reporting only. It was not directly involved in the work carried out by ACPL staff, nor did it have a decision making role.
The project team
This group was made up of senior ACPL and Auckland Council property department staff who were tasked with commissioning relevant expert advice. This is where parties like Mott MacDonald and Wareham Cameron became involved, providing advice on the façade engineering and compiling a consolidated due diligence report respectively. The project team then made a recommendation through to the council’s CEO.
A detailed timeline, complete with background documents, can be found on the council’s website. Main points include:
- An initial Sale and Purchase Agreement for 135 Albert Street was entered into in April 2012, with completion of due diligence being a significant condition.
- Over the next three months, reports by Mott MacDonald, Davis Langdon and Wareham Cameron – based on investigations by these experts – were presented to the project team.
- A recommendation was made by the project team to the CEO to go ahead with the purchase of the building.
- The CEO then reported back to the Council that he had completed the negotiation and 135 Albert Street would become the council’s new corporate headquarters. A reduced purchase price of $104m took into account the then expected cost of work required on the building’s stonework – which had been identified during due diligence.
- With the building now in council ownership, more invasive investigations could begin behind the façade to further define the extent of deficient detailing, and inform planning for future remedial work, if required.
