Archive | Stride (DNZ)

Stride revives plan to sell 3 Bunnings store to Investore amid other capital management initiatives

Investore Property Ltd and its creator & asset manager, Stride Property Ltd, engaged in some transactions this week which will see Investore buy 3 Bunnings properties from Stride, along with a number of other capital management issues.

Stride intended to sell the 3 properties to Investore when Investore listed last year, but didn’t get lease agreement in time. The new proposal requires Investore shareholder approval, but a meeting date hasn’t been set yet.

Investore is to buy 3 Bunnings properties at Hamilton, Rotorua & Palmerston North from Stride for $78.5 million at an initial yield of 6.13%, with structured growth of fixed 2.5%/year rental uplift.

Investore’s board is also exploring a possible share buyback & bond offering, and said its guidance of 7.46c/share cash dividend for the 2018 financial year was unchanged.

Stride established Investore out of a division of its own business and added a portfolio of Countdown supermarkets to list it in 2016. The forward investment strategy was to continue to acquire large format retail properties, a segment of the market identified as offering unique investment attributes.

“With this investment mandate clearly established, the board’s focus has been to look for further opportunities to expand Investore’s portfolio and to enhance shareholder returns by optimising capital structure. Investore believes the combination of the proposed acquisition, the capital management initiatives being considered, which include options around the implementation of a share buyback scheme & a bond issue, and repositioning of the portfolio, delivers on this strategy.”

Investore signalled in its 2016 initial public offering product disclosure statement that Stride had intended to transfer its remaining large format retail properties to Investore. However, Stride retained ownership of the identified assets because the terms of transfer couldn’t be agreed with the tenant, Bunnings Ltd, within the timeframe required to align a divestment with the timing of the Investore IPO.

As a material transaction under NZX listing rules concerning related parties, the transaction requires Investore shareholder approval. A meeting date hasn’t been set yet, but the board hopes to get approval for settlement to be concluded by 28 February. It’s engaged Northington Partners Ltd to prepare an independent appraisal report.

Independent Investore directors Mike Allen & Kate Healy managed the sale & purchase agreement negotiation with the Stride board and received independent valuations from Jones Lang LaSalle which supported the $78.5 million acquisition price.

Investore’s board said the acquisition of this Bunnings portfolio would diversify the tenant mix, reducing the Countdown concentration from 81% (as at 30 September 2017) to 73%, with Bunnings equating to 10% of the portfolio contract rental.

The board said the Bunnings’ portfolio would be leased on new 12-year lease terms and provide a higher proportion of structured growth into Investore’s portfolio, with a fixed 2.5%/year rental uplift. Net rent under the new lease starts at $4.81 million/year.

Following settlement of these properties, Investore’s bank loan:value ratio (LVR) is expected to increase from 39% to 46%. The board said: “Although this is below the targeted maximum LVR ratio of 48%, Investore is planning on disposing up to 3 properties to provide balance sheet capacity for future activities, including capital expenditure works, and is exploring the options around the implementation of a potential share buyback scheme. In addition, the board is also considering a bond issue.”

Bunnings retains the right to acquire the properties at year 48 of the lease, on the assumption that a new 6-year lease term is in place.

As a part of the 3 lease restructures, Stride will pay Bunnings $18 million on termination of the old leases & commencement of the new leases, implying a net cost to Stride of $13 million post-tax deductibility. As the payment is a component of investment property, it’s not expected to materially affect Stride’s distributable profit for the year to March 2018.

Stride has retained its other Bunnings property, at Carr Rd, Mt Roskill, where Bunnings has signalled its intent to carry out works within the next 12 months. Subsequent to these works, and subject to changes in the market or other portfolio commitments, Stride said it expected to put this asset on the market at the end of 2018.

Stride chair Tim Storey said the Stride board had reviewed its strategy on ownership of large format retail property and reaffirmed its view that interests in such assets should be held through Stride’s investment in Investore, or sold.

Attribution: Company releases.

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H&M to lead retail revival at Queensgate

Swedish fashion & homegoods retailer H&M will open its third New Zealand store in October, leading in to the return & arrival of a large number of other retailers at the quake-hit Queensgate Shopping Centre in Lower Hutt.

Kiwi Property Group Ltd brought the Swedish listed company, H & M Hennes & Mauritz AB, to New Zealand first, opening an H&M store at its Sylvia Park shopping centre in Auckland a year ago. Philip Carter’s The Crossing development in Christchurch, which incorporates offices and food & beverage outlets in a precinct which combines new & restored heritage buildings, opened the second H&M this month.

Queensgate, managed by Stride Investment Management Ltd for the Diversified NZ Property Trust, will open its H&M on Thursday 26 October, in 2700m2 on 2 levels in the Centre Court.

The Diversified trust bought the former Westfield mall from Scentre Group (NZ) Ltd in August 2016. Part of it was closed after the Kaikoura earthquake in November and a portion of the carpark & its cinema complex were demolished. After a partial reopening, the centre was fully reopened in April.

Stride shopping centres general manager Roy Stansfield said on Wednesday the company was also readying sites at Queensgate for other new stores and stores that were returning, relocating & upgrading: “We expect many of these to be completed before the busy Christmas period. These include Skechers, Bed Bath N Table, Health 2000, Portmans, Merchant, Bed Bath & Beyond and Boost Juice.

Earlier story:
9 July 2017: H&M to open at Queensgate

Attribution: Stride release.

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Investore to give board majority to independents

Investore Property Ltd’s board has proposed adding a third independent director, thus outnumbering the 2 appointed by the company’s manager, Stride Investment Management Ltd.

Stride said on Thursday the Investore board had proposed rebalancing the board – “for the benefit of shareholders & the company” – following discussions with Stride. The 2 parties had to get NZX approval to work their way around related party & associated person rules to change the board structure.

The proposal will go to the vote at Investore’s annual meeting on Friday 8 September.

Investore owns a portfolio of 39 large format stores. Stride Property Group owns 19.9% of Investore as well as its own property portfolio & the management business.

Earlier stories:
29 May 2017: Investore outperforms listing forecast
30 September 2016: Investore completes acquisition of 14 Countdown supermarkets
13 July 2016: Stride stapled securities & Investore start trading
13 June 2016: Stride unveils stapled structure & Investore IPO

Links:
Investore
Stride Property

Attribution: NZX documents.

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H&M to open at Queensgate

Expanding Swedish fashion retailer H&M (H&M Hennes & Mauritz AB) will open its first Wellington store at the Queensgate shopping centre in Lower Hutt this year.

Centre manager Stride Property Group’s shopping centres general manager, Roy Stansfield, said on Friday the announcement marked an important milestone in a large project, which had been a long time in the works: “We’re incredibly excited that a world-renowned brand like H&M has chosen Queensgate as the location for its first Wellington store. It’s testament to the standard of the centre & the opportunities in the region as a whole. Customers & retailers alike have been curious about the works going on in the centre as we prepare for H&M’s opening, so we’re very happy to be able to finally confirm who this new tenant is.”

Stride hasn’t confirmed the store’s opening date yet.

The Diversified NZ Property Trust, which Stride manages, bought the former Westfield mall from Scentre Group (NZ) Ltd last August. Part of it was closed after the Kaikoura earthquake in November and a portion of the carpark & its cinema complex were demolished. After a partial reopening, the centre was fully reopened in April.

H&M has a big international expansion programme underway, with 500 openings completed or planned this year.

Attribution: Company release.

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Meridian cuts space but signs new Customhouse Quay lease

Meridian Energy Ltd will cut the office space it leases at 33 Customhouse Quay, Wellington, by a third from September 2019, but has agreed to a new long-term lease on the balance.

Meridian occupies 4419m² but will cut back to 2933m² under the new 12-year lease that building owner Stride Property Ltd has agreed to.

Stride chief executive Philip Littlewood said both landlord & tenant would look for a new tenant for the 1486m² of level 1 space being vacated.

Attribution: Company release.

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Stride Property makes sound entry into new era

Stride Property Group moved into a new era last year and has reported returns which generally conform to its forecasts. One figure, the after-tax profit, is much higher as a result of value changes which weren’t forecast.

Stride Property Group and the large-format property arm it sliced off, Investore Property Ltd, both listed on the NZX on 12 July 2016, and both are managed by Stride’s real estate investment management business. The company said the group’s stapled structure gave the management side the ability to grow.

Stride Property Ltd retained a 19.9% shareholding in Investore.
Stride also manages the Diversified NZ Property Trust, which was restructured. It settled on the acquisition of the Queensgate & Chartwell shopping centres.

  • Profit after tax $56.9 million, up $25.9 million on forecast (primarily due to a net change in fair value of Stride’s investment properties)
  • Distributable profit after tax $37.7 million, up $400,000 on forecast
  • Combined annual cash dividend for Stride Property Group of 9.96c/share for the 2017 financial year
  • Targeting a combined 9.91c/share cash dividend for the 2018 financial year
    Net 2.7% property portfolio valuation increase.

Financial performance highlights (forecast figures in brackets):

Stride issued an explanatory memorandum on 10 June 2016 and has compared actual March 2017 results with the prospective financial information in the memorandum (in brackets). The 2017 actual statement of comprehensive income individual lines include discontinued operations from pre-demerger of Investore Property for comparative purposes.

  • Net rental income $63.6 million ($63.3 million)
  • Management fee income $8.5 million ($9.2 million)
  • Corporate expenses $15.6 million ($15.4 million), including $3.5m one-off project costs
  • Profit before other income & income tax $37.5 million ($37.4 million)
  • Profit after income tax $56.9 million ($31.0 million)
  • Distributable profit before income tax $45.5 million ($45.4 million)
  • Distributable profit after income tax $37.7 million ($37.2 million), equating to 10.33c/share (10.21c/share).

Portfolio highights (Stride Property Ltd 2016 financial year figures in brackets):

  • Net 2.7% property portfolio valuation increase
  • Loan:value ratio 38.8% (41.7%)
  • Net tangible asset backing/share $1.67
  • 270 lease transactions over 246,287m² for a total annual rental of $50.1 million
  • 2018 financial year lease expiries at 10.21% of the portfolio contract rental
  • 2019 financial year lease expiries at 8.72% of the portfolio contract rental
  • Occupancy at 96.8% (99.6%) reflects vacant office space at NorthWest Two, Westgate, and vacancy at 460 Rosebank Rd, Avondale
  • Weighted average lease term 4.9 years (7.9 years) reflecting the demerger of Investore.

Link:
Stride Property 2017 annual results

Attribution: Company release, annual report.

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Rest of Queensgate shopping centre to reopen

Stride Investment Management Ltd said on Wednesday it would reopen the balance of the Queensgate shopping centre in Lower Hutt on Thursday 6 April following completion of demolition of a portion of the carpark & its cinema complex.

The centre was closed for inspection after the Kaikoura earthquake in November and partially reopened 11 days later. It will be reclad and a ground-level carpark put in the place of the current demolition site. Some egress points will also change.

Stride Investment Management has previously announced it will rebuild the cinema complex. In the meantime, regional centre manager Jan Plummer said, the ground-level parking & cladding would be a medium-term solution.

“Shrink-wrapping the building to create protection from the elements will allow contractors to take their time in creating the best possible medium-term design aesthetic, with the intention being that the shrink wrap will still be in place at the time of reopening to allow this work to continue.”

Ms Plummer said retailers whose premises remained closed because of the adjacent demolition would be given a confirmed date to access their stores in the next week.

Queensgate is owned by the Diversified NZ Property Trust.

Attribution: Company release.

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Stride redesigns Johnsonville mall in new consent application

Stride Property Group has filed a new resource application for a smaller upgrade of the Johnsonville shopping centre, up the Ngauranga Gorge, 7km north of central Wellington.

In 2009, Stride – then known as DNZ Property Fund Ltd – got consent to increase the centre from 10,000m² to 32,000m². That version was to have contained a 4-level parking building with up to 1280 parking spaces.

The new version will take the mall to 26,000m² with 900 parking spaces.

Under Stride’s new stapled securities structure, Stride Property Ltd & the Diversified NZ Property Trust own the Johnsonville centre in a 50:50 joint venture and Stride Investment Management Ltd, the other side of the Stride group, manages them & the centre.

Stride chief executive Peter Alexander said yesterday the company had taken account of contemporary retail design principles & feedback from a number of sources to redesign the proposal: “Amongst other changes proposed in the updated design, we have reduced the overall scale of the project & the mix of retail uses. We have proposed a dining precinct, which we believe could become a destination in itself, and provided space for a boutique cinema within the complex. These elements will complement the mix of retail outlets & the food court that we have previously included in our design proposals.”

The new design provides for 120 specialty retailers. “Some shops will be located on Johnsonville Rd to preserve & upgrade the community-oriented main street environment. It is proposed that the Countdown supermarket will remain as an anchor tenant in the redeveloped shopping centre.

“This is an important step forward and provides a proposition that we can take to the market. Assuming that the application is approved by the Wellington City Council, the next phase is leasing precommitment, design, building consent and then construction procurement. The development is likely to be constructed in stages and we would target a construction start on site sometime between late 2017 & late 2018, subject to progress with approvals & preleasing.”

Image above: An impression of the corner of Johnsonville & Broderick Rds in the new design.

Earlier stories:
24 August 2016: Stride-managed trust settles 2 Westfield deals
13 July 2016: Stride stapled securities & Investore start trading
13 June 2016: Stride unveils stapled structure & Investore IPO
24 July 2015: DNZ looks to grow investment management as first Westgate project nears completion

Attribution: Company release.

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Stride-managed trust settles 2 Westfield deals

The Diversified NZ Property Trust, a wholesale investment entity managed by Stride Property Group, settled its purchase of 2 Westfield shopping centres from Scentre Group as scheduled on Monday.

The trust has bought Queensgate in Lower Hutt & Chartwell in Hamilton for $445 million.

Ownership has been transferred to Diversified’s trustee, Equity Trustees Ltd, and management to Stride Investment Management Ltd under an initial 10-year management contract.

Stride said when the Overseas Investment Office approved the deal on 1 August that new-look branding would be unveiled at each centre on settlement day, but that hasn’t happened yet, apart from dropping the Westfield name.

Attribution: Company release.

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Propbd on Q F5Aug16 – Wiri site for Turners, Ryman at Hobsonville, Metlifecare unconditional at Red Beach, port alliance, Stride buy OK

Turners buys Wiri property for anticipated business growth
Ryman buys at Hobsonville
Metlifecare unconditional on Red Beach site
New alliance between Auckland & Napier ports
Stride acquisition of 2 Westfield malls gets OK

Turners buys Wiri property for anticipated business growth

Turners Ltd has bought a 1ha site on the corner of Roscommon Rd & Vogler Drive in Wiri for $4.8 million. Chief executive Todd Hunter said on Wednesday the company bought the property to extend its footprint into South Auckland and to allow for the expansion of Turners’ fast-growing truck & machinery business.

“Acquisitions of strategic property sites are becoming an increasingly important part of the growth strategy for Turners Group NZ (ex-Turners Auctions) to allow for further footprint expansion as the business grows, and to achieve stronger control over property overheads. As part of this strategy Turners have previously purchased properties in South Auckland & Christchurch.”

This property is a highly visible corner site with easy access to motorways & arterial roads.

Ryman buys at Hobsonville

Ryman Healthcare Ltd will invest over $200 million developing a new 4ha retirement village site on Scott Rd, Hobsonville.

Ryman chair David Kerr told the annual meeting in Whangarei on 27 July the village would offer independent living & care options for over 400 residents.

The company also expects to have work underway on its second site at Brandon Park in Melbourne this year. In February, Ryman announced it had bought a third site at Burwood East and was on target to have 5 villages open in Melbourne by 2020.

Metlifecare unconditional on Red Beach site

Metlifecare Ltd said on 29 July it had gone unconditional on acquisition of a site on the former Peninsula golfcourse at Red Beach for its 16th Auckland retirement village. Settlement is due on 19 August and a resource consent hearing is scheduled for 30 August.

Chief executive Glen Sowry said the village would become home to over 500 residents and was planned to provide a full range of living options, including a 68-bed care home & a retail precinct.

Work to re-contour the golfcourse is intended to start soon, so development of the village can start in October 2017. Construction of the first stage is planned to be completed and the first residents welcomed in 2019.

Earlier story:
13 January 2015: Metlifecare buys 5ha of Red Beach golfcourse for new retirement village

New alliance between Auckland & Napier ports

Ports of Auckland Ltd & Napier Port announced a strategic alliance on Wednesday to provide operational, economic, sustainability & community benefits.

Ports of Auckland chief executive Tony Gibson said the partnership would allow the 2 ports to work together to find ways to optimise services for freight customers and achieve further scale & efficiencies in the supply chain: “It will prompt even greater competitive contestability & resilience in New Zealand’s supply chain to help lower costs to exporters & importers.

“There is a natural fit between Ports of Auckland & Napier Port. We share a similar way of working, common customers & supply chain opportunities and have similar ownership structures, so that’s a great base to work from.”

Stride acquisition of 2 Westfield malls gets OK

The Overseas Investment Office has approved Stride Property Group’s acquisition of the Westfield Queensgate shopping centre in Lower Hutt and the Westfield Chartwell shopping centre in Hamilton, through its wholesale investment vehicle, the Diversified NZ Property Trust.

Stride announced last November that Diversified had entered into an agreement with Scentre Group to acquire the shopping centres for $445 million.

Stride Investment Management Ltd, part of the Stride Property Group, manages Diversified’s property portfolio under a 10-year contract.

Stride chief executive Peter Alexander said new-look branding would be unveiled at each centre on settlement day. Stride expects to complete the deal by 22 August.

Earlier story:
27 November 2015: Scentre sells 3 malls to locals, one to go

Attribution: Company releases.

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