The Kiwi Income Property Trust is not going to exercise its option to buy the 40-level Royal and SunAlliance Centre in Auckland.
The purchase would have been via subscribing for units in Kiwi Development Trust, which owns the building.
KIP spokesman, Ross Green, says his trust is not willing to exercise the option under the terms required. Kiwi Income Property already owns 34% of the units in KDT.
Mr Green says his trust's interest in the building represents an important part of its commercial portfolio, but that "given the present level of rental income from the property, any purchase under the terms of the option by KIP could be expected to have a detrimental effect on KIP's future income available for distribution".
However Mr Green says Kiwi Income Property will continue to closely monitor leasing progress on the building in the future, both as a substantial current unitholder in KDT, and a potential purchaser of the balance of the building.
Meanwhile the Kiwi Development Trust says in light of the KIP decision, its primary focus of the in the medium term is to complete or maximise the leasing up of the remaining vacant space in the building.
KDT says active dialogue is being maintained with KIP, and the board will be open to proposals from any quarter should they eventuate.