Archive | Argosy Property

Corrected: Argosy sells Dalgety Drive property to owner-occupier

Published 21 March 2017, yield detail added 22 March 2017
Argosy Property Ltd has disposed of the industrial property at 67 Dalgety Drive in Wiri for $6.85 million, which the company said was a 44% premium to its most recent book value.

The company did an interim revaluation of its portfolio last September, for the first time since 2009, and that valuation of $4.45 million put the passing yield at 8.38%. The sale price is 54% up on that. The building has a net lettable area of 3698m².

Chief executive Peter Mence said yesterday Argosy classified the property as non-core. The buyer is a private company which will operate from the site once the lease of the current tenant, RLA Polymers Ltd, expires on 31 March.

Attribution: Company release, calculator.

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Argosy says delayed quake insurance payout won’t hurt dividend

Argosy Property Ltd said on Friday it had a $50 million estimate of the cost of reinstating the quake-affected NZ Post House in Wellington, based on a preliminary scope of works.

The building at 7-27 Waterloo Quay sustained damage to building services in the 7.5-magnitude Kaikoura earthquake on 14 November 2016. Argosy chief executive Peter Mence said independent engineers had confirmed that the building remained structurally sound, but significant replacement of fitout & services was required. NZ Post has reoccupied the ground floor & 4 other levels.

Mr Mence expected the damage to the building services & fitout to levels 1-4 & 7 would be repaired during the next financial year. Argosy has lodged a claim for the reinstatement cost & associated loss of rents under its material damage & business interruption insurance policy (less a $4.8 million deductible).

Under New Zealand accounting standards, Argosy can’t include expected insurance proceeds in its financial results until the proceeds are quantified & agreed. Mr Mence said that if they weren’t included, the loss of rents for the current year would have a net after-tax impact of about $1.85 million, or 0.23c/share in the period to 31 March 2017.

“This will have no impact on the March 2017 full-year dividend, which as previously announced is expected to be 6.1c/share and be fully paid from net distributable income for the year.”

Attribution: Company release.

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Argosy sells land next to Albany Mega

Argosy Property Ltd has entered into an unconditional agreement to dispose of about 14,600m² of vacant land at 258 Oteha Valley Rd in Albany for $11.65 million.

The land sits next to the Argosy-owned Albany Lifestyle Centre (the Centre), a 25,000m² split-level bulky goods retail centre.

Chief executive Peter Mence said today settlement was expected to occur in late February.

Argosy has also extended the lease of the Mitre 10 Mega store in the Centre by a further 8.5 years, taking the expiry of this lease out to 2032. As part of the lease extension, Argosy has committed to spending $3.1 million to extend the existing Mitre 10 Mega store into the garden centre and provide about 405m² of extra retail space on the upper level of the Centre.

Attribution: Company release.

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Argosy settles Wiri purchase

Argosy Property Ltd has settled its acquisition of the industrial property at 240 Puhinui Rd, Wiri.

Chief executive Peter Mence said on Friday the new design/build property had identical design & specifications to the very high modern standard of the adjacent Argosy-owned property at 19 Nesdale Avenue.

Both properties are occupied by Cardinal Logistics Ltd, with matching 15-year leases in place.
Argosy signed to buy 240 Puhinui Rd in November 2015 for $22.6 million on completion of the new design/build facility for Cardinal.

Earlier story:
30 November 2015: Argosy buys twice in Wiri

Attribution: Company release.

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Argosy leases Bunnings space on Ti Rakau

Argosy Property Ltd has leased the 11,675m² of warehouse space at 320 Ti Rakau Drive before the Bunnings distribution centre lease on the premises expires. It’s also filled vacant Greenlane space.

Argosy chief executive Peter Mence said yesterday: “The Bunnings distribution centre lease was one of Argosy’s key expiries remaining in the current financial year and it is very pleasing that we have been able to successfully lease this space to 2 quality tenants, both on new 10-year lease terms.”

Target International NZ Ltd is to lease 6567m² of the warehouse, plus 447m² of office space, which will serve as its head office.

Gunnersen Ltd, the largest independent Australian-owned distributor of wood-based panel products, timber & decorative surface materials, will lease the remaining 5108m² of warehouse area, plus 150m² of office.

Argosy will undertake $5.2 million of capital works to develop the site to facilitate the warehouse subdivision and to improve truck circulation & yard management.

Mr Mence said Bunnings was expected to remain in the warehouse on a monthly basis until the new year. The Bunnings retail store isn’t affected and will continue to trade as normal.

Greenlane space leased

Argosy has also leased the vacant 1150m² on 2 levels at 308 Great South Rd, Greenlane, to Housing NZ Corp, which has recently extended its lease at Argosy’s 626 Great South Rd property.

The 308 Great South Rd space was fully refurbished after Pacific Brands relocated to an adjoining Argosy building. Housing NZ’s lease on it is for 3½ years from 1 January.

Attribution: Company release.

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Argosy has 2.6% revaluation gain

The value of Argosy Property Ltd’s property portfolio rose by $35.8 million (2.6%) for the 6 months to 30 September, following an interim desktop review by independent valuer Colliers International.

That took the value to $1.4 billion, excluding properties held for sale.

Argosy chief executive Peter Mence said last week the increase in values was primarily due to the firming of market capitalisation rates & market rental growth.

The portfolio by region and then by sector, showing valuation at 30 September, 6-month change in value & percentage, and the market yield (with March yield in brackets:

Auckland: $954.8 million, up $34 million (3.69%), yield 7.12% (7.38%)
Wellington: $371.9 million, down $0.8 million (0.22%), yield 7.58% (7.65%)
North Island regional & South Island: $78.2 million, up $2.6 million (3.47%), yield 8.1% (8.71%)
Total: $1404.9 million, up $35.8 million (2.61%), yield 7.3% (7.53%).

And the portfolio by sector:

Industrial: $540.7 million, up $29.9 million (5.86%), yield 7.26% (7.69%)
Office: $550.6 million, down $0.5 million (0.1%), yield 7.55% (7.62%)
Retail: $313.6 million, up $6.4 million (2.08%), yield 6.92% (7.09%)

Attribution: Company release.

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Warehouse takes over ex-Dick Smith premises in Wiri

Argosy Property Ltd has confirmed the long-term lease of 17 Mayo Rd in Wiri to The Warehouse Ltd, an existing Argosy tenant.

The new lease is for a 10-year term over the entire property (13,350m² net lettable area), with annual CPI rent reviews.

Argosy chief executive Peter Mence said on Monday the property was previously occupied by Dick Smith, which left in April after entering receivership. Since then, Argosy has leased the property to various tenants on a short-term basis.

The Warehouse lease is due to start in early 2017.

Attribution: Company release.

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Argosy to add development on Hutt Rd site

Argosy Property Ltd has reached an agreement to redevelop the property at 180 Hutt Rd, Kaiwharawhara, Wellington.

Argosy has conditionally entered into a new 9-year lease with Fletcher Distribution Ltd for its continuing use by Placemakers, while also allowing for development of part of the site.

Placemakers will occupy a net lettable area of 3713m² and Argosy will develop an additional 1100m² of retail space. The redevelopment remains subject to resource consent.

Argosy chief executive Peter Mence said on Wednesday the 15-month redevelopment had an estimated cost of $9.39 million. The market value of the property on completion was expected to be $18.8 million, with a yield on cost of 7.26%.

Mr Mence said the redevelopment was consistent with Argosy’s strategy of adding value to existing assets & tenant-driven expansion.

Attribution: Company release.

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Argosy sells 2 non-core properties

Argosy Property Ltd has entered into unconditional agreements to sell 2 properties for a total $9.3 million. Both are in the 8% of the company’s portfolio that’s been designated as non-core.

Argosy has sold the retail property at 28-30 Catherine St, Henderson, for $6 million, 7.1% above the most recent book value of $5.6 million. Chief executive Peter Mence said: “The location of this retail property will become increasingly challenging and the disposal is expected to settle on 30 June 2017.”

The industrial property at 44 Neil Lane, Palmerston North, has been sold for $3.3 million, 5% above its current book value of $3.14 million. Mr Mence expects this transaction to settle in mid-November. He said it concluded Argosy’s divestment of non-core assets in Palmerston North.

Attribution: Company release.

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Argosy lifts profit as repositioning continues

Argosy Property Ltd increased net profit after tax by 22.6% in the year to March to $78.9 million ($64.4 million last year), as the company continued to reposition its portfolio to quality acquisitions, tenant-driven developments and non-core divestment.

The biggest divestment was the sale in March of the 44ha of vacant land at the Manawatu Industrial Park in Palmerston North for $23.3 million.

Company chair Mike Smith said yesterday operating results had continued to improve, with increases in both net property income & distributable income. The metrics of the portfolio remained strong, with a high occupancy rate at 99.4% and a weighted average lease term of over 5 years.

The company has increased its final cash dividend to 1.525c/share (imputation credits 0.1972c/ share), taking the full-year dividend to 6.025c/, ahead of guidance. The expected 2017 payout is 6.1c/share.

Highlights:

  • Pretax profit before tax rose to $83.6 million ($68.6 million) after allowing for the non-cash impact of interest rate swaps & property revaluations
  • Gross distributable income/share rose 7.5% to 7.6c (7.07c)
  • Net distributable income/share rose 3.8% to 6.25c (6.02c); the dividend payout ratio is 96.8%
  • Earnings/share rose 21.2% to 9.79c (8.08c)
    Earnings before finance costs, property revaluations & tax rose 7.7% to $89.4 million ($83 million)
  • Interest expense increased by $1.4 million; the $44 million increase in average debt levels was largely offset by a reduced weighted average interest rate, capitalised interest of $76,000 was down from $1.3 million, which related to the Stout St development in Wellington
  • Debt, excluding capitalised borrowing costs, was 36.7% of total assets (37.8%); the target debt:total-assets ratio remains at the 35-40% gearing range
  • Total assets rose by $73.7 million to $1.375 billion ($1.313 billion)
  • The syndicated banking facility was extended on improved terms.

Property highlights:

  • Net property income rose 8.2% to $98.4 million ($90.9 million) as a result of repositioning of the portfolio and rental growth
  • Divestments totalled $60 million
  • Acquisitions totalled $48 million, including 8 Nugent St, Grafton, for $42 million
  • Occupancy (by rental) was stable at 99.4% (99.2%)
  • Weighted average lease term was stable at 5.24 years
  • Valuation gain of $42.2 million ($38.6 million), up 3.2% on book values
  • Following the revaluation, the portfolio showed a passing yield of 7.57% and a yield on fully let market rentals of 7.53%.

Attribution: Company release.

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