Archive | Sectors

6 sales & 7 leases for Bayleys in Manawatu & Wellington

Bayleys offices in the lower North Island, but primarily in the Wellington region, have reported 6 sales & 7 leases of commercial space.

Image above: 57 Kiln St, Silverstream.

South of the Bombays

Manawatu

Palmerston North

43 Alderson Drive:
Features: 7552m² site, 1504m² industrial building used as a cold storage facility by national tenant Big Chill on a 12-year lease from 2013 with annual CPI increases; includes 1692m² of adjoining development land
Rent: $369,937/year net + gst
Outcome: sold for $5.4 million at a 6.85% yield
Agent: Fraser Press

328-330 Broadway:
Features:1356m² cbd site, 2-level 920m² commercial building, 7 tenants; 3 ground-floor retail tenants including TAB and offices above, on 2- to 3-year leases
Rent: $149,100/year net + gst
Outcome: sold for $1.8 million at an 8.3% yield
Agents: Karl Cameron, Lewis Townshend & Bede Blatchford

Wellington

CBD

138 The Terrace:
Features: 605m² site, 9-level 3000m² office building, 7 tenants including Kiwibank, Chen Palmer & QE2 National Trust, on varying lease expiries through until 2023
Rent: $679,083/year net + gst
Outcome: sold for $7.55 million at an 8.99% yield
Agent: Mark Sherlock

Lower Hutt – Wingate

15 Eastern Hutt Rd, Wingate.

15 Eastern Hutt Rd:
Features: 4108m² site – 1438m² yard, 2670m² warehouse building; purpose-built distribution centre for Harvey Norman which has a 5-year lease from November 2016, with 4 5-year rights of renewal
Rent: $264,230/year net + gst
Outcome: sold for $3.5 million at a 7.55% yield
Agents: Mark Hourigan & Fraser Press

Paraparaumu

35 Te Roto Drive:
Features: 1.0865ha corner site with parking for over 100 cars & 3616m² data centre; Unisys NZ Ltd has occupied the site for 17 years and signed a new 5-year lease in October 2016, with 3 3-year rights of renewal
Rent: $457,000/year net + gst
Outcome: sold for $5.71 million at an 8% yield
Agents: Mark Sherlock & Stephen Lange

Upper Hutt – Silverstream

57 Kiln St:
Features: 4.0369ha site 167 parking spaces, 23,481m² warehouse & office building developed in the 1980s as Foodstuffs (Wellington) Ltd’s head office & distribution centre; 12,228m² of high stud, clearspan, drive-through warehousing, 5420m² of lower stud warehousing & 5733m² of offices partly refurbished in 2012
Outcome: sold by Foodstuffs to another owner-occupier for $10 million
Agents: Richard Faisandier, Mark Hourigan & Fraser Press

Leases

Wellington

CBD

102-122 Lambton Quay, level 8:
Features: 379m² of B grade office space, one-year lease term
Rent: $130,165/year + gst at $350/m²
Agent: Jim Wana

Newlands

6 Hurring Place, unit 2a:
Features: 1680m² industrial building with office accommodation over 2 levels
Rent: $273,030/year net + gst
Agent: John Pritchard

Te Aro

3 Market Lane
Features: Lease assignment of 1960m² of office space on 3 levels by Xero to co-working business BizDojo encompassing just over 3 years on the initial lease term plus further rights of renewal until 2027 as well as naming rights; Xero will relocate this year from 3 buildings to become anchor tenant in the nearby former Manthel Motors heritage building being redeveloped by The Wellington Co Ltd
Rent: Undisclosed
Agents: Luke Frecklington & Luke Kershaw

82 Tory St:
Features: 250m² of restaurant space, 6-year lease term
Rent: $120,000/year + gst at $350/m²
Agent: Luke Frecklington

Lower Hutt

531 High St:
Features: 3569m² lowrise office building, 75 parking spaces, leased for 6-year term
Rent: $856,080/year + gst at $240/m²
Agent: Matt Gibbs

Ngauranga

4 Glover St:
Features: 2500m² industrial building, 7m high warehouse with multiple entries, offices, 15 parking spaces
Rent: $330,000/year + gst
Agent: John Pritchard

Upper Hutt

20 Somme Rd:
Features: 1000m², 2 floors of office & lab space with modern fitout; 12-year lease term begins on 1 October
Rent: $212,220/year + gst
Agent: Matt Gibbs

Attribution: Agency release.

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Hereford apartment auctioned off plans

An apartment in Tawera Group Ltd’s Hereford Residences conversion of the former commercial building, Baycorp House, sold off the plans at Bayleys’ city auction on Wednesday.

An unusual Parnell building that combines apartment, office & parking on 4 levels was pulled from the auction and a St Heliers apartment was passed in.

CBD

Uptown

Hereford Residences, 8 Hereford St, unit 702:
Features: 115m² internal, 15m² balcony, 2.7m-high ceilings, 2 bedrooms, 2 bathrooms, 2 parking spaces, storage locker
Outcome: sold off plan for $1.225 million
Agents: Julie & Ellis Prince

Isthmus east

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: auction postponed
Agent: Millie Liang

St Heliers

10 Benbow St, unit 2:
Features: 3-bedroom apartment, 2 bathrooms, decks, double garage
Outcome: passed in
Agents: Murray Wallace & Hamish McKay

Attribution: Agency release.

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Institutions much keener on Kiwi Property offer than existing retail investors

Kiwi Property Group Ltd completed the retail bookbuild component of its $161 million fully underwritten 1-for-11 pro rata entitlement offer on Wednesday.

Chief executive Chris Gudgeon said 74% of all entitlements were taken up by existing shareholders. But there was a clear division of enthusiasm between institutional & retail shareholders – 94.5% of the institutional component was taken up by existing shareholders, but in the retail component it was only 50.4%.

The clearing price under the retail bookbuild was $1.38/share, a 2c premium over the application price. Eligible retail shareholders who elected not to take up their entitlements and ineligible retail shareholders will therefore receive 2c for every new share they don’t take up.

Mr Gudgeon said in June the NZX-listed company intended to use the net proceeds initially to pay down bank debt and reduce gearing, before being used to fund potential investment & development opportunities, including the potential expansion & improvement projects at Sylvia Park, Northlands, The Base, and in the longer term at Drury.

Earlier story:
21 June 2017: Kiwi Property seeks $161 million new equity

Attribution: Company release.

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FMA updates non-GAAP guidance

The Financial Markets Authority released updated guidance yesterday on disclosing non-GAAP (generally accepted accounting principles) financial information.

In the listed property sector, the main issues – for decades – have been the separation of revaluations from operating earnings and whether they have been highlighted consistently.

A third issue is how visible earnings/security are in listed entities’ results – important in assessing performance where capital has been raised.

The guidance note replaces one issued in 2012 and follows a review covering the last 5 years.

Garth Standish.

The authority’s capital markets director, Garth Stanish, said in yesterday’s release: “Capital markets only work properly if investors receive accurate and timely information. That information must also be understandable and engaging to investors. It should form an accurate, clear and compelling story about how a company is performing.

“Company financial statements are a vital part of the information investors receive. However, in the financial statements of many companies you’ll find phrases like ‘underlying earnings, ‘normalised profit’ or ‘cash earnings’. Information disclosed this way can sometimes confuse more than clarify. The information can be misleading if it is presented inconsistently, is not adequately defined, or used to hide bad news.”

Links: Consultation process
Guidance note: Disclosing non-GAAP financial information

Attribution: Authority release.

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Institute figures show Auckland housing market quiet, rest of country bubbling

Real Estate Institute statistics out yesterday showed Auckland’s residential median sale price was still rising, but only by 2.5%/year, whereas the rest of the country was up 11.4%.

The divergence in price between Auckland & the rest of the country remains wide. Auckland’s median in June was $850,500 ($830,000 in June 2016), while the median for the rest of the country was $431,000 ($387,000).

The institute’s house price index showed Auckland falling 0.6% over the year, but the rest of the country rising 9.2%. The national movement for the year was up 2.8%.

Auckland sales volumes fell 33.2% over the last year, and nationally sales fell 24.7%.

Real Estate Institute chief executive Bindi Norwell said yesterday: “We know that it’s winter and the election is just 2 months away now, which typically impacts the number of properties sold in the market. The number of properties sold across the country is the lowest we’ve seen in the month of June for 3 years – particularly in the $500,000-&-under property price bracket. This slowdown in transactional activity, but stabilising price trend, highlights the underlying dynamics between housing demand & housing supply, with population growth continuing to rise faster than building consents & dwelling supply.”

“The June figures show us that a number of things are happening across the residential real estate market – inventory levels are impacting pricing, loan:value ratios are having a significant impact in terms of buyers’ ability to purchase properties (particularly for first-time buyers) and that the major trading banks are being more cautious with their approach to lending, particularly their view of how highly leveraged Kiwis are when it comes to properties.

“Talk of a decline in prices may be premature, with the seasonally adjusted median price trends still rising across many regions in New Zealand. The Auckland market is the most mature in terms of the property cycle. However, at worst, prices in the Auckland region are steady at present. The data also shows an emerging trend of section sales in Auckland occurring more quickly than dwelling sales, highlighting that demand for sections is still rising in Auckland while demand for dwellings is easing.

“With the looming election, Auckland prices are showing all the signs of stabilising that we would normally expect, and we anticipate this being a similar trend over the coming months until the election is over.”

The number of properties available for sale rose by 1895 in June compared to 12 months ago, although the number of properties for sale in the Auckland region has increased by 3097 (57%).  Excluding Auckland, the number of properties for sale fell by 1203 (7.4%).

The number of properties sold by auction continued to decline, down to 828 auction sales in June (14% of all sales, from 13% in May, 24% in June 2016).

Auckland median prices & volumes on old council boundaries:

Price brackets:

Attribution: Real Estate Institute release.

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Auction results, and a market assessment

Amid the noise over a decline in residential sales, it’s important to establish where that’s happening and in what types of market.

In Auckland, it was not at all surprising that a steep rise in prices should be followed by a decline, while Reserve Bank measures tightening borrowing have forced a further decline through the inability to borrow, and the absence of Chinese borrowers this year – compared to auctionrooms last year that were filled with Chinese buyers who appeared to have no limits – has taken further steam out.

The auction results presented below are from Barfoot & Thompson’s cbd apartments auction yesterday – 2 units, one sold – and from residential auctions on Tuesday & Wednesday.

Of the total 13 properties listed below, 8 sold, but the selection I’ve focused on is presented for the geographical mix as much as for the housing type.

Now that Auckland Council’s unitary plan is almost entirely in place, the real estate world has begun presenting more properties for their redevelopment potential, and many of those with such potential at lower prices are in isthmus fringe areas such as Point England & Glen Innes to the east, Mt Roskill & Mt Albert to the west. Unlike the regional fringes where new subdivisions are being developed – on the Hibiscus Coast to the north, across the top of the harbour to the west, and in a number of districts through old Papakura & Franklin to the south – these ones are close to the city centre, within 10km compared to beyond 25km or 40km.

On the isthmus, a house that was once in a bad neighbourhood can now command a price tag above $1 million, and all it’s done is age. Bad neighbourhoods could be defined as having a high state housing ratio, low-decile incomes, large families squeezed into small homes, poorer construction materials, and a general lack of foliage on sections and in streetscapes.

Those new price tags will force the old families out, and little is being created for them to move to. Those price rises in the bad neighbourhoods will also help lift already-soaring prices in the good neighbourhoods – the leafy areas of the eastern suburbs, for example.

Much of the entry-level housing is in cross-leased houses or mostly old brick-&-tile units. The prices for those can be as high as a modern product such as a 3-year-old GJ Gardner home (one in Mt Albert is listed below).

CBD

Learning Quarter:

Forte, 37 Symonds St, unit 505:
Features: 2-bedroom apartment, 2 bathrooms, deck
Outgoings: rates $1253/year including gst; body corp levy $3634/year
Outcome: sold for $540,000
Agents: Justin Choi & Zoran Farac

Longview, 6 Whitaker Place, unit 4D:
Features: 55m², one-bedroom apartment, deck
Outgoings: rates $1278/year including gst; body corp levy $3996/year
Outcome: no bid
Agents: Justin Choi & Stephen Shin

Isthmus east

Ellerslie

50 Amy St, unit 9:
Features: 3-storey townhouse, 3 bedrooms, carport
Outcome: sold for $785,000
Agent: Karin de Leeuw

Epsom

10 Orakau Avenue, unit 2:
Features: 2-bedroom townhouse, internal-access garage
Outcome: sold for $1.32 million
Agents: John Zhang & Louissa Bao

Glen Innes

52 Taniwha St:
Features: 837m² section, 3 bedrooms, study, garage, 4 offstreet parking spaces – in redeveloping Wai O Taiki Bay area bordering Glendowie, zoned mixed housing suburban
Outcome: sold for $1.09 million
Agents: Paul Neshausen & Sam Bowen

Mt Wellington

13A Wilkie Place:
Features: cross-lease, half share in 935m², 5-bedroom house – 3 bedrooms upstairs, separate & consented 2-bedroom flat downstairs with own entrance, carport, 2 offstreet parking spaces
Outcome: sold for $920,000
Agents: Jane Wang & Luke Shi

Stonefields

10 Robert Sale Rise:
Features: 354m² section, 235m² townhouse, 5 bedrooms, 3 bathrooms, 2 family rooms & separate lounge, double garage
Outcome: sold for $1.6 million
Agents: Frances Li & Ian Thornhill

Isthmus west

Mt Albert

60D Taylors Rd:
Features: 291m² section, 4-bedroom house, 3 bathrooms, family room, separate lounge, double internal–access garage, built 3 years ago by GJ Gardner
Outcome: sold for $1.36 million
Agents: Paul Donovan & Sharon Walls

Tremont Apartments, 4 Wagener Place, unit 409:
Features: top-floor apartment, 2 bedrooms, secure parking space
Outcome: passed in
Agents: George Fong & Laura Mc Auley

Mt Eden

706 Mt Eden Rd & 2A Watling St:
Features: 2 houses on 809m² corner section, each with own half-share cross-lease – 80m² 2-bedroom house on Mt Eden Rd, 140m² 3-bedroom house, double garage on Watling St
Income assessment: current rental expectation $1000-plus/week
Outcome: passed in when both offered together, no bid on Watling alone
Agents: Kelly Zhang & Hattie Liu

Mt Roskill

98 Melrose Rd, unit 3:
Features: 2-bedroom unit, carport
Outcome: no bid
Agents: Richard Han

North-west

Henderson

16 Matuhi Rise:
Features: 3-bedroom duplex, garage & workshop, carport, in-ground pool
Outcome: passed in, back on market at $649,000
Agents: Repeka Lelaulu & John Elgar

Te Atatu Peninsula

8 Celsmere Lane:
Features: renovated 2-bedroom house on 528m² section
Outcome: sold for $1.12 million
Agents: Angel Li & Louis Lai

Attribution: City apartments auction, auction documents.

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2 commercial properties sell at Colliers auction

Both commercial properties auctioned at Colliers yesterday were sold under the hammer.

The agents said the Onehunga property’s overall size and warehouse:office ratio was in huge demand from occupiers, with little to no supply in this size & price range, and it was under-rented.

Isthmus east

Onehunga

34 Princes St:
Features: 627m² mixed-use site, 405m² net lettable area – warehouse 341m², office 63m², seismic rating 75% of new building standard
Rent: $43,000/year net + gst (under-rented)    
Outcome: sold for $1.185 million
Agents: Ben Cockram & Hamish West

South

Flat Bush

2 Bishop Dunn Place, unit 3:
Features: vacant 132m² ground-floor office fronting Te Irirangi Drive  
Outcome: sold for $685,000
Agents: Matthew Barnes & Jeremy Barnett

Attribution: Auction documents.

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Retail Property Group valuation up 44% as NZX listing looms

NZ Retail Property Group Ltd’s pre-transaction restructuring to enable a backdoor NZX listing through Bethunes Investments Ltd has been completed, and Bethunes chair Chris Swasbrook said on Monday legally binding documentation to formalise the transaction should be entered within a week.

When Bethunes (previously the philatelic business Mowbray Collectables Ltd) said in March it had signed a non-binding conditional term sheet with NZRPG and its controlling shareholder, Westgate Power Centre Ltd (headed by Mark Gunton, pictured above), the shares in NZRPG were estimated at about $400 million.

In a roadshow presentation about its future look issued on Monday, Bethunes said: “Based on current valuations, NZRPG is expected to have about $575 million of assets in its property portfolio, including rights to acquire additional assets. About 40% of its total property assets – including the assets to be acquired – are development in nature.”

The portfolio comprises holdings in 3 Auckland town centres – Westgate, Milford & Birkenhead – and the Fraser Cove shopping centre in Tauranga.

NZRPG is unique in New Zealand in selling apartments above 2 of its mall developments – Milford (under way after a long consent battle) & Birkenhead (plans outlined).

Its main project has been at Westgate, at the top of the North-western Motorway (State Highway 16) in Auckland, where it accumulated 57ha for a masterplanned town centre servicing the north-west and still holds 28ha that’s ready to build on, on top of the developments already constructed.

In the words of the presentation, “Its existing [Westgate] holdings have a strong & stable cashflow and are well positioned to build on organically as demand materialises.”

The company said it had a defined path to portfolio growth: “NZRPG has been at the forefront of planning for the urban intensification required to provide a credible outcome for Auckland’s growth aspirations (and supported by the Auckland unitary plan).

“It is focused on the strategic development of its existing retail centres into planned town environments & mixed use assets. This is expected to include the provision of residential overlays to all its town centre properties, which will enhance the retail performance and allow for capital to be recycled into the core business.”

NZRPG board named

When NZRPG takes over the Bethunes listing, the board will comprise Paul Duffy as independent chair and directors Mark Gunton, Sean Joyce & Bruce Cotterill. Mr Gunton, founder of the business 30 years ago, is an executive director and the others are independent.

Mr Duffy is a former chief executive & executive director of Stride Property Ltd and now chairs Augusta Capital Ltd. He’s also a director of NPT Ltd, the NZX-listed property company which Augusta secured a big enough toehold in to defeat Kiwi Property Group Ltd in April in a contest for NPT’s management contract.

Mr Cotterill was elected as independent chair of NPT in April after winning a board seat on Augusta’s nomination.

Mr Joyce is a corporate & commercial lawyer in Auckland, has been a non-executive director of a number of companies listed on the NZAX & NZSX, a non-executive director of a consumer finance company & a funds management firm.

One NZX-listed shell company he’s chaired, NZF Group Ltd, was renamed Blackwell Global Holdings Ltd on Monday after a reverse listing by Taiwanese wholesale investor Chai Kaw Sing (Michael Chai).

Links:
NZ Retail Property Group
NZX 10 July 2017: NZ Retail Property Group presentation

Earlier stories:
10 March 2017: Gunton looks to backdoor-list Retail Property Group through Bethunes
25 May 2016: Milford shopping centre expansion approved

Attribution: Bethunes release, NZRPG & Joyce websites.

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Development pipeline changes outlook of suburban apartment sector

Suburban owner-occupier apartments are becoming an increasingly significant component of Auckland’s apartment market, CBRE research shows.

Investors have always formed part of the suburban sector – well over half the market until early 2015, as the research paper shows. But, as investment apartment numbers stuck at around 1200, the owner-occupier share has steadily grown every quarter since mid-2015.

In the paper released on Monday, CBRE Research senior director Zoltan Moricz & senior analyst Tamba Carleton said steady growth in development of suburban owner-occupier apartments over the last 18 months meant they now accounted for a quarter of the current pipeline and, should all projects proceed to completion, suburban owner-occupier stock would double by the end of 2019.

“Although this boom in supply is well above long-term averages, the majority of the pipeline is presold. And, while there are a range of complex issues constraining the market, there is sizeable growth potential for suburban owner-occupier apartment development in the near future.”

CBRE’s researchers counted 2280 suburban owner-occupier units built between 1995 and the first part of 2017. The pipeline is nearly as big as the volume constructed over the last 20 years, with 2190 units planned to be completed between now and the end of 2019.

“This level of growth is unprecedented in Auckland’s history, and is reflective of a structural shift in housing composition & societal attitudes toward density. Early adopter buy-in has been highly localised, with a high proportion of presale buyers either living in or at least familiar with the area.

“There has been limited buyer resistance, with comparatively few of the 20 suburban project abandonments driven by a lack of buyers. However, in some locations community resistance has shaped the surrounding pipeline or in extreme cases reduced it completely.”

Mr Moricz & Ms Carleton said the buyer stereotype was a downsizing baby-boomer couple, but the reality was “a much more diverse demographic of off-the-plan buyers who make a purchasing decision based on a combination of lifestyle & economic factors. Decisions are based on individual values & beliefs, however there tends to be sufficient buyer interest in projects that are well located, well designed and affordable relative to house prices in the immediate area.”

The researchers highlighted a major challenge facing the market as residential price growth slows – the high cost of development, mostly due to construction costs: “This has a flow-on effect to retail prices, reducing the economic attractiveness of new apartments relative to other types of dwellings and resulting a different outcome when purchasing decisions are made.

“The combination of high development costs with slowing house price growth has contributed to reduced feasibility of mid- to highrise apartments in many suburban locations. This has shifted the focus of the pipeline from purely high density toward variations of the ‘missing middle housing’, including walk-up dwelling typologies & semi-terraced apartments.

“These lower density typologies will appeal to owner-occupiers if they are well located, well designed and affordable relative to house prices in the immediate area and, with the unitary plan allowing more of this development than ever before, the suburban owner-occupier pipeline has significant growth potential moving forward.”

Attribution: CBRE report.

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Augusta House sale settlement date confirmed

Augusta Capital Ltd confirmed on Monday that it had completed the subdivision of its Finance Centre property in Auckland and new titles had been issued for its 4 parts – Augusta House, the podium retail, the Finance Centre podium and the Finance Centre carpark).

The company therefore confirmed 24 July as settlement date for the $30 million sale of Augusta House to Heng Yue Ltd (David (Duoyu) Bei). The settlement dates for the remaining 3 properties haven’t changed and are: Podium retail 1 April 2018, Finance Centre podium & Finance Centre carpark 1 April 2019.

The sale excludes the original Finance Centre office tower at 191 Queen St, now owned by Sir Bob Jones’s Robt Jones Holdings Ltd.

Augusta signed its $96 million sale package a year ago and collected a $3 million deposit on Augusta House from Heng Yue, which also paid the additional 10% deposits due last month.

Augusta managing director Mark Francis said: “While the delay in finalising the subdivision of the Finance Centre has been frustrating, Augusta has continued to receive all rent during this period and the settlement dates of the remaining 3 titles have not been affected.

“The proceeds will be applied towards debt repayment, with $10 million towards core debt and $17 million toward the facility drawn down for the underwrite of the 33 Broadway syndicate. As a result of this debt repayment, balance sheet capacity for future initiatives is increased.”

Earlier stories:
5 July 2017: Augusta closes Mercury HQ syndication 34% short, underwrites balance
25 July 2016: Finance Centre sale confirms Augusta’s full focus on funds management

Attribution: Company release.

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