Archive | Market

Herne Bay apartment sells

A Herne Bay apartment (outlined in picture) was sold at Bayleys’ city residential auction yesterday, and a Henderson cross-lease was passed in.

Isthmus west

Herne Bay

5 Curran St, unit 6:
Features: renovated one-bedroom top-floor apartment, parking space
Outgoings: body corp levy $3663/year
Outcome: sold for $825,000
Agent: Chris Batchelor

North-west

Henderson

63A Sturges Rd (flat 2):
Features: cross-lease, half share in 1031m², 3 bedrooms, garage + extra parking
Outcome: passed in at $635,000
Agent: Karina Thorburn

Attribution: Auction.

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8 out of 10 sell at Bayleys commercial auction

8 of the 10 properties in Bayleys’ Total Property commercial auction yesterday were sold under the hammer.

6 of them were vacant or with short leases. Of the 3 where a yield could be calculated, an Asian supermarket in Papakura (outlined in picture) sold at 4.7%, a Grange hair salon at Warkworth sold at 5.9% and a Birkenhead property with 5 tenants sold at 6%.

Isthmus east

Onehunga

12 George Terrace:
Features: vacant 521m² site, 515m² refurbished standalone industrial building, zone allows live/work or residential
Outcome: sold for $1.4 million
Agents: James Valintine & William Gubb

Parnell

11 Farnham St:
Features: 269m² site, standalone building with 4 levels built 10 years ago, 659m² floor area, private lift to penthouse on top 2 floors, conservatory, 4 bedrooms, 5/6-car garage + secured yard parking on ground floor, partitioned office & amenities on level 1, air-conditioned on levels 1-3
Outcome: sold for $3.22 million
Agents: Millie Liang

St Johns

121 Morrin Rd:
Features: 4755m² site, 2312m² high stud warehouse, 6 roller doors, small office, yard + parking
Rent: short-term tenancy in place
Outcome: sold for $6.81 million
Agents: Jamsheed Sidhwa, Luke Carran & James Valintine

North-east

Birkenhead

49-55 Birkenhead Avenue:
Features: 801m² site, 481m² floor area, 5 tenants, town centre zoning has 21m height limit
Rent: $112,070/year net + gst
Outcome: sold for $1.867 million at a 6% yield
Agents: Michael Nees, David Huang & Oscar Kuang

Browns Bay

755 Beach Rd:
Features: vacant 1029m² site, 70m² building, mixed use zoning allows building height up to 4 storeys
Outcome: passed in at $700,000
Agents: Ranjan Unka & Anna Radkevich

Rosedale

372 Rosedale Rd, unit 2A:
Features: 186.7m² first-floor office, 6 parking spaces, tenant Bayleys Real Estate Ltd
Rent: $58,209/year net + gst + outgoings, 18-month lease from 1 April, 2 18-month rights of renewal
Outcome: no bid
Agents: Matt Mimmack & Eddie Zhong

Unsworth Heights

1 Greenwich Way, shop 7:
Features: 186m² retail unit, tenant BookPrint Ltd
Rent: $51,520/year net + gst + outgoings
Outcome: withdrawn from auction
Agents: Dean Gilbert-Smith & Adam Curtis

Warkworth

The Grange, 67 Auckland Rd, unit 22A & 22B:
Features: 119m² shop, tenant Vivo Beauty Ltd
Rent: $49,100/year net + gst, new 8-year lease
Outcome: sold by the developer, Square & Main Street Ltd (Adam Reynolds) for $830,000 at a 5.9% yield
Agents: Matt Lee, James Chan & Henry Napier

North-west

Henderson

111 Lincoln Rd, unit FB:
Features: retail unit, tenant Petstock
Rent: $105,000/year net + gst, new 6-year lease
Outcome: withdrawn from auction
Agents: Tony Chaudhary & James Chan

South

East Tamaki

20 Ra Ora Drive:
Features: vacant 4885m² site, metalled, fenced & electronic security gate, former Howick Bus Co Ltd depot
Outcome: sold for $2 million
Agents: John Bolton, Roy Rudolph & Katie Wu

Papakura

303-305 Great South Rd:
Features: 2023m² site zoned business mixed use, Asian supermarket tenant
Rent: $161,740/year net + gst, new 4-year lease + 3 4-year rights of renewal
Outcome: sold for $3.44 million at a 4.7% yield
Agents: Quinn Ngo, Matt Lee & Piyush Kumar

Takanini

305 Great South Rd:
Features: vacant 990m² industrial site, 448m² warehouse
Outcome: sold for $1.52 million
Agents: Shane Snijder & Peter Migounoff

Attribution: Auction.

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Ivory & Station R apartments attract no bid

2 apartments in 2 new developments – Conrad’s Ivory and Ockham’s Station R – attracted no bid at City Sales’ auction yesterday. Both developments were sold off the plans.

Isthmus east

Epsom

Ivory, 10 Lion Place, unit 405:
Features: 52m², one bedroom, flexi-room, deck, parking space
Outgoings: rates & body corp levy to be confirmed
Outcome: no bid
Agents: Alister Nichol

Isthmus west

Mt Eden

Station R, 11 Fenton St, unit 502:
Features: 79m², 2 bedrooms, study, 2 bathrooms, deck, parking space
Outgoings: rates $2402/year including gst; body corp levy $4343/year
Outcome: no bid
Agents: Trisha Shanaghan

Attribution: Auction.

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2 warehouses sell at yields under 5.2%

2 warehouses in Penrose & Mt Wellington were sold on firm yields at Colliers’ auction yesterday – 4.79% on the Greenpark Rd property (pictured) and 5.17% in Mt Wellington.

A third property, a mix of office & warehouse used for clothing storage but offered vacant, attracted no bid but was under negotiation post-auction.

Isthmus east

Mt Wellington

7A Te Apunga Place:
Features: 3012m² site zoned light industrial, 732m² net lettable area – warehouse 472m², storage 144m², office & amenities 116m², tenant Visor Distributors (2017) Ltd
Rent: $120,000/year net + gst, new 6-year lease from 30 June, 2 3-year rights of renewal
Outcome: sold for $2.32 million at a 5.17% yield
Agents: Hamish West & Todd Kuzmich

Parnell

33C Falcon St, unit 3D:
Features: 643m² office & warehouse offered vacant – offices 299m², amenities 22m², storage 44m², warehouse 249m², loading bay 29m², 5.25m stud in warehouse, roller door, 12 stacked parking spaces, one in open
Outcome: passed in, only bid was from vendor at $2 million
Agents: David Burley & John Davies

Penrose

4-6 Greenpark Rd:
Features: 1160m² site zoned light industrial, 584m² net lettable area – warehouse 317m², offices & amenities 102m², showrooms 166m², canopy 8m², tenant Vesta Electrical Supplies Ltd
Rent: $78,000/year net + gst, initial lease term expires 30 April 2021, 2 4-year rights of renewal
Outcome: sold for $1.63 million at a 4.79% yield
Agents: Paul Jarvie, Brad Johnston & Matt Prentice

Attribution: Auction.

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New NZ Oil & Gas suitor noted for global shipping, cruise & property interests

NZX-listed NZ Oil & Gas Ltd’s new suitor – favoured by the board – is a subsidiary of an international conglomerate headed by Eyal Ofer (pictured), who has interests globally in shipping, the cruise sector, real estate, hospitality, banking & financial investments.

Mr Ofer chairs the Ofer Global Group, a private portfolio of international businesses, and he also chairs the world’s second largest cruise ship company, Royal Caribbean Cruises Ltd, whose fleet includes Ovation of the Seas, one of the largest cruise ships to visit New Zealand.

Among Mr Ofer’s other interests, he has recently financed 2 large conversions & a new office development in New York through Global Holdings, a private real estate group that specialises in largescale commercial real estate and high-end residential developments in top-tier cities.

He also chairs the Zodiac Group, a private organisation based in Monaco that owns a fleet of over 150 large ocean-going vessels trading worldwide and operated through Zodiac Maritime in London.

The NZ Oil & Gas contest

The Ofer subsidiary, OG Oil & Gas Ltd, told NZ Oil & Gas’s board in a letter last Friday it proposed to make a partial offer of 77c/share, lifting its stake from the present 4.3% to a range of 50-70% and trumping the partial & conditional 72c/share offer from Singaporean company Zeta Energy Pte Ltd for 42%, which would lift its stake over 50% (the minimum condition) from the present 21.2%.

The Ofer subsidiary’s letter went into considerable detail on why it thought the Zeta offer would provide a poor outcome for NZ Oil & Gas shareholders, and offered the prospect of wider interest in the New Zealand economy.

OG Oil & Gas said it was working with advisors Bell Gully & First NZ Capital to prepare the relevant documentation required to implement its proposal and expected to finalise a takeover notice within the next 2 weeks.

NZ Oil & Gas chair Rodger Finlay told shareholders in a newsletter on Monday the Ofer proposal “is not yet a formal offer and there is no certainty that it will develop into a formal offer. However, on the basis of the material disclosed to date, and if it becomes a formal offer, it appears superior to the offer from Zeta.”

NZ Oil & Gas said on Friday its independent directors’ initial view was that “the [Zeta] offer lacks merit and the price is too low”. On the information available, they expected to unanimously recommend that shareholders reject the Zeta offer, which was made on 10 August. The target company statement, including a report from the independent advisor, Northington Partners Ltd, will be sent to all shareholders by 22 September.

Zeta’s parent, ASX-listed Zeta Resources Ltd, invests in a range of resources activities, including, gold & base metals exploration & production.

The target company, NZ Oil & Gas, had a market capitalisation of $99 million as at 8 August. It holds a 4% interest in the Kupe oil & gas field in the offshore Taranaki basin and is participating in 2 deepwater prospects off the South Island, including the Barque prospect. The company also holds a 50.01% shareholding in ASX-listed Cue Energy Resources Ltd.

NZ Oil & Gas completed a return of capital by way of a court-approved scheme of arrangement on 12 May, cancelling one in every 2 fully paid shares. 159.4 million shares were cancelled and $99,999,317 was paid to shareholders.

The Ofer rationale

The Ofer subsidiary said it was making its proposal for 3 reasons: “First, we believe now is the right time in the exploration & development cycle to invest in the oil & gas sector. After many years of lean investment, we feel there is a unique opportunity for companies that are willing & able to prudently deploy resources towards new exploration.

“Second, we think New Zealand is the right place to make this investment. We are excited to have another opportunity to invest meaningfully in New Zealand, an area where our group has had success in the past. As you will recall, through our affiliate Omni Offshore Terminals, a global leader in the provision of floating production storage & offloading units to the offshore oil & gas industry, we invested more than $US300 million in a floating production storage unit for the Maari oilfield.

“Our group is eager to return to doing business in New Zealand. Geographically, NZOG’s Wellington headquarters fits well within our group’s global footprint, which includes a significant presence throughout Asia.

“We have been present for more than 30 years in Tokyo, for more than 25 years in Singapore and for more than 10 years in Shanghai, and we are excited about making Wellington our entry point into Australasia.

“In addition, we have noted NZOG’s commitment to working closely with local communities in the areas where they operate, an approach that we share. Each of the businesses in the Ofer Global Group has been built on investments in long-term relationships in the communities where they are based.

“Third, we believe NZOG has the right leadership to cultivate the substantial value embedded in the company. It was through the Maari floating production storage unit project that we first met members of NZOG’s management & executive team and came to appreciate their values & capabilities.

The criticism

“Our experience on the Maari project and our more recent opportunities to work in conjunction with the NZOG team have affirmed our belief that OG Oil & Gas can work successfully with NZOG in the future. Given our excitement about NZOG’s current & prospective opportunities, we were disappointed to learn that NZOG’s largest shareholder, Zeta Resources, views the company as ‘essentially a cashbox.’

“While Zeta’s proposal to return $50 million to shareholders is conditional on both shareholder approval & a binding ruling from Inland Revenue (and thus far from certain), if successful it would leave NZOG without the means to attract the high quality partners necessary for sustainable growth or to execute on the opportunities before it today.

“We believe the company is appropriately capitalised for the exciting opportunities at its disposal. To put it simply, we think Zeta’s stated focus on reducing NZOG’s financial resources and reducing headcount is in direct conflict with enhancing shareholder value, puts the company at risk of losing its valuable foothold in New Zealand and does little or nothing to increase private sector investment in the New Zealand economy.

“In contrast, OG Oil & Gas believes that NZOG’s current resources should be retained and focused on responsibly pursuing attractive investment opportunities in the exploration & production sector. To take one example, OG Oil & Gas believes that a suitable farm-in partner will be found for the Clipper exploration permit. Following the establishment of such a joint venture, OG Oil & Gas is very optimistic about, and strongly supportive of, the Clipper exploration. We likewise believe that NZOG’s interest in the Toroa prospect should be diligently pursued. We expect our group’s many relationships will be valuable in finding suitable farm-in partners for these prospects.”

Link: Ofer Global

Attribution: Company releases to NZX, Ofer websites & reports, Lloyds List, Wall St Journal.

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2 industrial leases & a sale

Colliers agents have leased a large new Goodman Property Trust warehouse in Penrose, an Avondale industrial property and sold an Invercargill warehouse.

Isthmus east

Penrose

Gate Industry Park, 395 Church St:
Features: 6723m² industrial property – warehouse 4223m², stud height 9m, warehouse amenities 333m², enclosed canopy 941m², air-conditioned offices 1226m² over 2 floors, yard 2300m², 55 parking spaces, leased by Goodman Property Trust to Easy2C Ltd for a term of 5 years & 3 months
Rent: $600,726.20/year net + gst
Agents: Andrew Hooper & Greg Goldfinch

Isthmus west

Avondale

17-19 Patiki Rd:
Features: 4878m², leased to Glidepath Ltd
Rent: $620,000/year net + gst     
Agents: Dwayne Warby & Shoneet Chand

South Island

Invercargill

5 Liddell St:
Features: 1827m², warehouse & showroom leased to Ideal Electric Ltd
Outcome: sold for $1,001,500 at a 7% yield
Agents: Mark Simpson & Rory O’Donnell

Attribution: Agency release & promotional material.

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2 NZ Post properties sell in Christchurch

2 NZ Post properties were sold in Christchurch on Friday to start Bayleys’ sixth Total Property commercial auction series for the year. An Ashburton property was passed in.

The auction series comes to Auckland today, with 10 properties on the auction list.

South Island

Canterbury

Ashburton

390-400 East St:
Features: 994m² corner site in Ashburton’s main street, 1329m² building, 3-year ground-floor lease from settlement to NZ Post & Kiwibank, 2 upstairs monthly tenancies, 396m² of vacant space
Rent: $56,052/year net + gst
Outcome: passed in at $425,000
Agents: Blair Young & Mitchell Wallace

Christchurch

Bishopdale

31 Bishopdale Court (pictured above):
Features: 278m² site, 309m² refurbished & strengthened building; 6-year lease until October 2022, with 2 3-year rights of renewal to arts supplies, giftware & book retailer Paper Tree, which also has NZ Post & Kiwibank services contract that includes 534 postboxes
Rent: $62,000 /year net + gst
Outcome: sold for $1.1 million at a 5.64% yield
Agents: Blair Young & Mitchell Wallace

Woolston

713 Ferry Rd:
Features: 566m² corner site adjacent to recently opened New World supermarket, 320m² standalone building – 201m² Discount Dairy tenancy which holds NZ Post services contract with 590 postboxes on lease until June 2024, and 119m² occupied by laundromat with a lease until February 2023
Rent: $60,832/year net + gst
Outcome: sold for $871,000 at 6.98% yield
Agents: Blair Young & Mitchell Wallace

Attribution: Agency release.

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National says rent & homebuying subsidies are good, I say they’re pure inflation

Prime Minister & former Finance Minister Bill English said it last Monday and his party came it again yesterday: the Government is propping up the rental market and, yesterday, it would make more money available to first-homebuyers so they can pay a deposit.

The Stuff website took the first story from one side, leaving the further consequences alone.

Image above: Prime Minister Bill English during TV3’s leaders’ debate.

Subsidies flow straight through

Both policies are widely acknowledged ways of feeding landlords & home sellers – though ostensibly supporting impecunious buyers & renters. I wrote in 2009 that Australia’s Housing Industry Association criticised that country’s first-homebuyers’ grant – introduced in 2000 to overcome the impact of GST – because it reduced affordability because it flowed directly through to the property seller’s bottom line.

Mr English said in the second televised leaders’ debate on TV3 that the Government spent up to $6 million/day propping up New Zealand’s private rental market. The $2.3 billion/year in rent subsidies supported 60% of private tenants, and Mr English argued it was helping to keep many Kiwis out of poverty.

Social Housing Minister Amy Adams said the Government supported 320,000 of New Zealand’s 550,000 rental households.

Look at these subsidies another way: What would happen if they weren’t paid? Beyond the initial assumption that all those no-longer-subsidised tenants would be evicted, who would pay the rent? Their places would not be immediately filled.

The argument here is that it is not the tenant being subsidised, it’s the landlord. The consequences of ending the subsidy would, in due course, be that rents would fall so landlords could get tenants. That, in turn, would affect rental yields and, again in due course, would tell both prospective landlords & banks that the prices of houses intended for rental were too high.

All round, in due course, adjustments would be made.

Homebuyer support runs same course

Yesterday, Ms Adams and Building & Construction Minister Nick Smith (now spokespersons in the election campaign period) said National would double the financial support available to first-homebuyers when buying an existing house, and increasing it for new builds.

Ms Adams said of the measure to make it easier for first-homebuyers to get a deposit: “National believes every New Zealander should be able to buy their own house if they want to – so we are building on our existing suite of measures to support first-homebuyers.”

National would raise the Government HomeStart grant for a couple by $10,000 to $20,000 for an existing home, and to $30,000 for a new-build.

“The additional grants mean there is funding to help a further 80,000 people into their first home over the next 4 years, on top of the 31,000 people the scheme has already helped,” Ms Adams said.

Building and Construction spokesperson Dr Nick Smith says HomeStart Grants complement other Government measures to support first home buyers, including:

Welcome Home Loans allow first-homebuyers to access Government-backed mortgages with a 10% deposit, and KiwiSaver FirstHome withdrawals allow them to access all of their KiwiSaver funds to put towards a deposit.

Dr Smith added these available funds together: “Take a couple on the average wage in Auckland who have been in KiwiSaver for 5 years and are looking to buy their first home. Between the $20,000 HomeStart grant and their KiwiSaver withdrawal, they will have around $60,000 for a deposit for an existing home.

“Add in a Government-backed Welcome Home loan, which means they only need a 10% deposit, and they have enough for a house worth up to $600,000 – the Auckland HomeStart cap for existing homes – without needing other savings.

“That’s significant support for those New Zealanders, particularly given 18% of home sales in Auckland in the past year were below $600,000.

“If that couple lived in Palmerston North, they would have enough for a 20% deposit on a $300,000 house, without the need for a Welcome Home loan.”

Ms Adams said National would also simplify the process for borrowers, combining HomeStart grants & Welcome Home loans into one HomeStart product, so first-homebuyers could get all the support available to them from one place.

“We will simplify the application process for Welcome Home loans to allow accredited banks to approve these 10% deposit, Government-backed loans on the spot, rather than going through an often time-consuming process with Housing NZ,” Ms Adams said.

Dr Smith said National’s policies would help 200,000 new houses be built over the next 6 years – the equivalent of 4 extra Dunedins.

“We are increasing our support for first-homebuyers and making it easier to access, to further help young New Zealanders achieve their dream of owning their first home.”

The changes would come into force on 1 January 2018 and have been priced at $74 million/year, to be met from the 2018 Budget allowance. Costs in 2017-18 would be met from the between-budget contingency.

If – as Australia’s housebuilding organisation believes, and I understand numerous NZ Treasury recommendations have agreed (sources to come) – feeding the borrower or prospective tenant actually feeds the seller or the landlord, what is the outcome? Higher prices.

The Government has been feeding inflation via subsidies – and National intends to lift that inflationary input.

Links:
Stuff, 6 September 2017: PM Bill English says Govt spends billions propping up the private rental market

Earlier stories:
12 October 2016: First-homebuyers hit KiwiSaver for over $500 million in deposits
25 August 2014: National promises easier access to first-home money, Pavletich says it’ll fuel housing inflation
1 October 2013: Housing NZ offers first-homebuyers deal to buy empty old provincial stock
22 May 2015: Smith launches fund to build houses on Government land
27 March 2015: Parliament passes KiwiSaver HomeStart Bill
29 July 2013: Shearer says Labour will block overseas speculators; plus some extra statistics
23 October 2009: Australian incentives boost construction, hurt affordability

Attribution: Ministerial/party releases, Stuff.

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Wesley College developer selects build partners & new subdivision name

The Wesley College Trust Board & the developer of its subdivision on the college farm at Paerata, Grafton Downs Ltd, announced 12 build partners & a new name for the project last week.

300ha around the college was approved as a special housing area in 2015, with plans for up to 5000 homes in 10 stages.

Grafton Downs sales & marketing manager Shaun Millar said: “We have chosen the build partners because of the outstanding quality of their workmanship. In the interests of creating equal opportunities for builders in the community, we selected to work with large franchisee companies & small family businesses, all of whom are local.”

The build partners named last week are 4 widely known businesses – GJ Gardner, Jalcon Homes, Jennian Homes Ltd & Signature Homes Ltd – and local builders Capital Homes Ltd, DW Homes Ltd, Emandee Homes Ltd, Mark Price Builders Ltd, Navigation Homes NZ Ltd, Nick Bosanac Builders Ltd, Palladium Homes Ltd & Precision Homes NZ Ltd.

Grafton Downs executive director Chris Johnston said the development would be named Paerata Rise, after initially proposing to call it Wesley. That had upset residents of the isthmus district of Wesley in the Mt Roskill suburb, which doesn’t have a postcode but does have primary & secondary schools and a community centre bearing the Wesley name.

Grafton Downs applied to the NZ Geographic Board to disestablish use of the Wesley name in Mt Roskill so it could be used for the new town being built on the college farm, but withdrew the application in May last year.

Mr Johnston said of the new name last week: “As well as acknowledging the existing Paerata community, the name is a nod to the meaning of Paerata in te reo, that is, ‘horizon of the rata’. It was important to those involved in the development that the name was in keeping with, as well as inclusive of, the area’s heritage.”

The new development is 20km south of the Auckland cbd and 4km from Pukekohe, the main centre in Auckland’s Franklin ward. The development company is owned by the college board & 2 Methodist Church trusts, the Pact 2086 Trust and Te Taha Maori Property Trust.

Mr Johnston said: “We will be working closely with approved build partners to create, as prescribed under the Paerata Rise design guide, a new unique place to live where homestead architecture is envisaged. Homes will be carefully placed on their sites to maximise the natural landscape settings, creating comfortable living environments & quality streetscapes.”

Plans for the development site were designed by San Francisco-based Surfacedesign Inc, co-founded by Kiwi urban designer & sustainable landscape architect James Lord. The company is responsible for the abstract landscaping at Auckland Airport.

“Surfacedesign Inc are a great firm to work with. James Lord & his team grasped our vision to create a development that embraces the environment and creates a good relationship between sections, houses & green space.”

Stage 1 earthworks are complete, waste & water pipes are being laid and the onsite civil work is underway. The 12 build partners will have access to roads in mid-December and the first residents are expected to move in by mid-2018.

Earlier story:
15 July 2015: 300ha Wesley special housing area approved

Attribution: Company release.

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2 Airport Oaks sales

2 Airport Oaks properties have been sold by Bayleys agents.

South

Airport Oaks

2 Freight Place (pictured):
Features: 7279m² site on corner of Richard Pearse Drive, 5270m² industrial building constructed in the early 2000s, occupied by third party logistics provider Online Distribution Ltd on 10-year lease until 31 October 2024 with rights of renewal until October 2033
Rent: $559,606/year net + gst
Outcome: sold for $9.735 million at a 5.75% yield
Agents: Mike Adams & Dave Stanley

38 Richard Pearse Drive:
Features: 4854m² site, 2873m² industrial building, remaining weighted average less term of 3.71 years from 3 tenancies – 1232m² of former office space over 2 levels at the front converted in 2007 to a gym; a physiotherapy clinic occupies 142m²; 1499m² of rear warehouse space has been furniture company Early Settler’s distribution centre since 2009, in conjunction with an adjoining property
Rent: $351,750/year net + gst
Outcome: sold for $4.845 million at a 7.26% yield
Agents: Jamsheed Sidhwa, Luke Carran & Nelson Raines

Attribution: Agency release.

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