Tag Archives | DNZ

Westgate opens for business tomorrow

Auckland Council celebrates the birth of its newest town centre tomorrow as Stride Property Ltd (ex-DNZ Property Fund Ltd) opens the first stage of its $155 million NorthWest Shopping Centre at Westgate.

Mayor Len Brown & deputy mayor Penny Hulse will join Upper Harbour MP & Local Government Minister Paula Bennett for a 9am ribbon-cutting ceremony at the mall tomorrow.

The mall, built over the last 18 months, is one part of NZ Retail Property Group Ltd’s wider development masterplan.

It’s ironic that the council should be celebrating the success of collaboration, when so much of the development’s history was affected by non-collaboration – right down to years of the developer using one name, Westgate, which has prevailed over the insistence of councils to call it Massey North.

While the Waitakere City Council supported development – it recognised the need for more business to be based in West Auckland – the Auckland Regional Council was entrenched opposition. But, as I wrote in 2009, “7 years & $26 million of development costs down the track, the 156ha new project has been placed inside the metropolitan urban limits”.

Auckland Council has provided core development infrastructure, including roads, stormwater ponds & an open spaces network. The council’s also providing public amenities – the first completed project is Te Pumanawa, the new town square, and construction of the public library is scheduled to start early next year.

Council city transformation projects manager John Dunshea said yesterday: “The opening of Te Pumanawa & the NorthWest Shopping Centre is a great achievement and is part of the long-term development of the Westgate area. Planning for the town centre development was completed in 2012 after a long process and is a great example of what can be achieved when the council, community & developers work together.”

Earlier stories:
18 October 2013: Plan change 15 for Westgate & plan change 36 for Waitakeres fully operative Monday
19 December 2008: Expanded Westgate a new Newmarket?
8 March 2010: Council says 435ha MUL shift will create 30,000 jobs
18 November 2009: Opposition pushes Massey North start out 8 years from conception

Attribution: Council release.

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DNZ secures funding for Countdown portfolio

The 19-supermarket Countdown portfolio bought by DNZ Property Fund Ltd this week has maintained its value in yield terms through its recent sales.

DNZ bought the whole portfolio (3 still subject to third-party consent) from the Pears Group of the UK for $287 million at a 6.5% initial yield on net rent of $18.7 million. Leases range from 9-19 years remaining, with a weighted average lease term of 18 years. All the supermarkets are leased to Countdown operator General Distributors Ltd, a subsidiary of Woolworths Ltd of Australia.

The transaction is unconditional and scheduled for completion between 28 October & 12 November, except for the 3 requiring third-party consent.

In the most recent transaction on the portfolio, when Pears Group company Antipodean Supermarkets Ltd bought the remaining 50% from joint-venture partner the Charter Hall Retail Trust in 2010, the initial yield was 6.6%.

The portfolio has a long history of trades, starting when the Macquarie CountryWide Trust bought 13 of the supermarkets from Progressive Enterprises Ltd in a sale-&-leaseback arrangement in 2000. Macquarie Countrywide (later to become Charter Hall Retail Reit) grew the portfolio to the present 19 supermarkets and sold 50% to Antipodean for $103.5 million in 2006, at 68% over its acquisition cost base. Charter Hall completed sale of the balance to Antipodean for $85.3 million in 2011.

Antipodean Supermarkets was a 75:25 joint venture between the William Pears Group of Companies Ltd and Jonny Berman, who sourced the portfolio for the family-owned Pears group, but a second company owning part of the portfolio, Antipodean Properties Ltd, was wholly owned by Pears’ Orbit Estates Ltd.

DNZ spoke recently of growing its real estate investment management business, and chairman Tim Storey said this week the company saw this portfolio as an opportunity to establish a new, specialist investment product with a higher-than-average leverage & income yield.

Chief executive Peter Alexander said the portfolio complemented DNZ’s existing $168 million portfolio of bulk retail assets, which included supermarkets, hardware outlets & a discount department store.

Acquisition funding

DNZ completed a $115 million of 59.4 million new shares yesterday, fully subscribed at $1.94/share. Settlement & allotment is expected on Wednesday 7 October. Further funding will come from a $15 million share purchase plan at up to $15,000/shareholder. Details will be sent out on Friday 9 October, with an expected close of Wednesday 28 October.

DNZ will use bank debt from existing lenders to fund the $161.4 million remaining required to complete the acquisition.

The company said it expected the acquisition to be accretive to distributable profit/share, by between 1.3-1.8% in the first 3 full financial years.

Earlier stories:
1 September 2014: Charter Hall reit completes NZ selldown
18 April 2011: Charter Hall completes sale of all but 2 of its NZ supermarkets
20 April 2007: Macquarie CountryWide uses NZ sale proceeds to enter Europe
10 December 2006: Macquarie CountryWide sells 50% interest in Progressive supermarket properties

Attribution: Company releases, Pears websites, Overseas Investment Office.

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DNZ Property becomes Stride in fortnight

DNZ Property Fund Ltd will changed its name to Stride Property Ltd in a fortnight.

The NZX-listed company’s directors resolved today to change the name, effective Friday 25 September.

Chairman Tim Storey said: “The rebranding is a reflection of the confidence the company has in its future and the approach it takes to managing & building its portfolio. The new name more accurately demonstrates the essence of the company and its future direction in the property investment business.

“The company has been through a number of positive changes since listing, particularly over the past 18 months. We have refined our strategy with a renewed team & leadership and deliveredstrong results for our investors. Consequently, the market perception of us has shifted.”

Chief executive Peter Alexander highlighted the connection between the company’s new approach to business and its rebrand: “It’s important our identity represents who we are today and in the future, and that it epitomises our people, our culture, our places & performance. We are a progressive company, forward-focused and confidentlymoving ahead. The name Stride communicates that confidence and reflects the deliberate & purposeful steps we are taking to deliver the best possible performance.

“With this new branding we will be better differentiated & visible to all of our stakeholders.”

The company, which manages $950 million of commercial property, increased operating profit before other income & income tax by 13.1% in the March year to $39.6 million, and increased its cash dividend by 13.9% to 10.25c/share.

Mr Alexander, appointed chief executive in December 2013, said: “The opening of the NorthWest Shopping Centre on 1 October, with 100% of the retail space leased, and the commencement of the NorthWest 2 (previously referred to as Westgate stage 2) development are very strong indicators of the company’s future strength.

“We believe Stride embodies the key characteristics of a company as robust & positive about the future as we are.”

Attribution: Company release.

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DNZ looks to grow investment management as first Westgate project nears completion

DNZ Property Fund Ltd chief executive Peter Alexander told the annual meeting on Wednesday the company was looking for opportunities to grow its investment management business, as it restructures its Diversified NZ Property Fund to bring in new investors.

Meanwhile, its Westgate shopping centre is scheduled to open on 1 October, the company is working on plans for a stage 2 development and continues to assess redevelopment at Johnsonville in Wellington.

Mr Alexander said the retail space in the NorthWest Shopping Centre at Westgate was almost completely leased, with only 2 retail tenancies yet to be confirmed and 7 office suites available. The 2 anchor tenants are Farmers’ department store and a Countdown supermarket.

Mr Alexander said the project was on target to meet or better its anticipated return on cost: “The net operating income yield on development cost on completion of all leasing is expected to slightly exceed the 7.75% forecast given when the project was announced. As at 31 March 2015, the value on completion was appraised at $170 million, ahead of the $160 million originally forecast. The project is being funded through the company’s debt capacity & the sale of non-core assets.”

He said the success of the NorthWest centre provided a platform to proceed with the second stage of the Westgate development, and DNZ had almost completed design on this. Westgate stage 2 will comprise a further 7500m² of retail, dining & office space on land opposite the NorthWest centre.

“Westgate stage 2 is expected to cost about $35 million and provide an initial minimum yield of over 7%. The exact timing of the project is yet to be finalised, but completion is targeted for late in 2016. We will fund the development through the sale of non-core assets.”

However, a dispute over the stage 2 site, between DNZ & Westgate developer Westgate Town Centre Ltd remains unresolved. Mr Alexander said: “Our work on Westgate stage 2 is being undertaken as a result of a right contained in our original agreement to acquire the NorthWest Shopping Centre land from Westgate Town Centre Ltd. That company has disputed the terms of this right. However we disagree on this point and consider that the terms of the agreement are clear. DNZ & Westgate Town Centre Ltd are currently engaged in dispute resolution, and we look forward to a positive outcome to this.”

In Wellington, DNZ is also reviewing plans to turn the Johnsonville Shopping Centre into a contemporary retail centre. He said DNZ hoped to have the review completed by late 2015.
In a separate stream of activity, DNZ is pursuing opportunities in real estate investment management: “It is quite clear to us that this area holds appeal for investors, and that there is global interest in investing in the New Zealand economy.

“DNZ already manages Diversified NZ Property Fund Ltd, a wholesale property fund, and receives management fee income for managing its assets. We are in the process of restructuring Diversified NZ Property Fund with its existing investors, to enable easier access for new investors. Expansion of our real estate investment management business may include the growth of Diversified, or the establishment of new funds & investment structures.”

Attribution: Speechnotes.

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Propbd on Q T14July15 – Eastgate leases, DNZ incentive plan, Agility moving to airport

Medical centre & social services providers sign up for Eastgate space
New incentive plan for DNZ executives
Agility signs up for new airport HQ

11.45pm:
Medical centre & social services providers sign up for Eastgate space

NPT Ltd has entered into conditional agreements to lease a substantial vacant area of the Eastgate Shopping Centre in Christchurch and to construct additional food outlets.
The vacant area on the upper level has been unoccupied since the centre reopened following the Christchurch earthquakes.

Managing director Kerry Hitchcock said on Monday this entire area would be occupied by the Linwood Avenue Medical Centre, which will move to a new integrated family health centre and a cluster of social services providers, including Aviva, Barnardos, Family Help Trust, START, Red Cross & He Waka Tapu.

New incentive plan for DNZ executives

DNZ Property Fund Ltd’s board has adopted a new long-term incentive plan for selected employees aimed at aligning their interests with those of shareholders. The plan is similar to the one it replaces, providing for participants to be granted rights to be issued shares for nil consideration if they meet certain performance hurdles based around total shareholder returns & distributable profit/share.

The plan contains 3 schemes, which provide for the issue (if all hurdles are met in full) of up to 97,298 shares for the 3 years to 31 March 2016, 270,421 shares for the 3 years to 31 March 2017 and 294,493 shares for the 3 years to 31 March 2018.

Agility signs up for new airport HQ

Agility Logistics Ltd will move its New Zealand head office from Richard Pearse Drive, Airport Oaks, to Auckland Airport’s The Landing Business Park.

Auckland International Airport Ltd has signed the Kuwait & Dubai-listed global logistics provider up for a purpose-built 4750m² facility to house Agility’s New Zealand head office & warehouse.
Agility Australasia chief executive Mick Turnbull said a major attraction was the planning & investment Auckland Airport had directed towards creating a world-class business park.

Attribution: Company releases.

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Propbd on Q Th2July15 – Corinthian sale, Courtenay Quarter sale

DNZ sells Albany office property
Colonial Motors sells Taranaki St site

9.08am:
DNZ sells Albany office property

DNZ Property Fund Ltd has entered into an unconditional contract to sell the office property at 51 Corinthian Drive, Albany, for $15.15 million. $450,000 above the 31 March valuation.

DNZ has sold $46.7 million of assets to contribute equity to its $155 million NorthWest Shopping Centre project at Westgate. That project has a forecast valuation on completion of $170 million, with settlement scheduled for 30 September.

DNZ has also settled on the acquisition of the investment property at 35 Teed St, Newmarket, for $17 million.

Colonial Motors sells Taranaki St site

The Colonial Motor Co Ltd has entered into an unconditional contract for the sale & 2-year leaseback of the dealership property of Capital City Motors Ltd at the corner of Taranaki & Jessie Sts in Wellington.

The buyer is development company Vicinity Ltd (Michael Cole & Ashok Pama), through subsidiary Balgan Ltd. Colonial Motors’ directors said Vicinity’s directors viewed the development of the property as an excellent opportunity to add to the vibrancy of the Courtenay Quarter.

The leaseback period will enable the new owners to plan development and Colonial Motors to relocate.

Settlement is scheduled for 31 August.

Attribution: Company releases.

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Propbd on Q W16Jun15 – Coke off to Landing, Goodman bond rate, C:Drive lease renewed, DJ’s condition satisfied, NZF exit agreed

Coke signs up for production plant at airport
Goodman bond rate set
ASB renews C:Drive lease early
Kirkcaldie’s seismic condition satisfied
NZF Group proceeds to final payout

11.40pm:

Coke signs up for production plant at airport

Coca–Cola Amatil (NZ) Ltd will establish a manufacturing operation at The Landing Business Park at Auckland Airport in a purpose-built, high-tech, 12,000m² building developed by the airport company.

Auckland International Airport Ltd mentioned the development in its interim results presentation in February but didn’t name the tenant.

Coca–Cola Amatil managing director Chris Litchfield said today: “Auckland Airport has the ability to deliver a product which meets our specific requirements. We need to consolidate a number of operations into one, meaning that we require a location that ticks all the boxes in terms of connectivity, security & accessible amenities.”

Airport property general manager Mark Thomson property said Coke’s move highlighted the airport company’s ability to tailor solutions to unique customer requirements: “We are focused on creating a business environment that caters to a wide range of users.  Our extensive landholdings allow Auckland Airport to tailor bespoke solutions, not only for traditional logistics activities but also for technology users & selected manufacturers, such as Coca-Cola Amatil.”

Goodman bond rate set

Goodman Property Trust’s new issue of Goodman+Bonds had their interest rate set at 5%/year today, reflecting a margin of 1.25%/year over the underlying swap rate.

The $100 million of bonds will be quoted on the NZX debt market.

They have an investment grade issue credit rating of BBB+ from Standard & Poor’s. The Goodman trust’s current corporate credit rating is BBB.

The bonds will be issued on 23 June and will mature in 7 years.

ASB renews C:Drive lease early

DNZ Property Fund Ltd said today ASB Bank Ltd had extended the lease term on its C:Drive technology & innovation hub at 33 Corinthian Drive, Albany, by 9 years from expiry on 15 October 2016 to 2025.

The office building has a current rental of $2.8 million/year, $34 million valuation, an 8.24% contract yield and a market cap rate of 7.88%.

Kirkcaldie’s seismic condition satisfied

Australian retailer David Jones Pty Ltd advised Kirkcaldie & Stains Ltd yesterday that one of the 4 conditions for it to take over the Kirkcaldie’s department store in Wellington had been satisfied.

Kirkcaldie’s chairman Falcon Clouston said David Jones was satisfied by the detailed seismic assessment report. The agreement is still conditional on Kirkcadlie’s shareholder approval by 30 July, landlord consent by 2 July and Overseas Investment Office consent by 30 November.

David Jones intends to operate from the Lambton Quay premises from mid-2016.

Earlier story, 5 June 2015: Kirkcaldie & Stains to become a David Jones store

NZF Group proceeds to final payout

NZF Group Ltd’s creditors resolved at the watershed meeting yesterday that the company should execute the deed of company arrangement, which offers a full & final settlement payment to noteholders by the end of this month.

The deed has been executed by the company and the deed administrators, Peri Finnigan & Tony Maginness of McDonald Vague, which ends the administration begun on 21 May.

The deed allows for the deed administrators to distribute available funds to creditors, with senior creditors being paid in priority to noteholders. Noteholders will be paid in proportion to the face value of their capital notes registered at the record date of 25 June.

The administrators said they anticipated that noteholders would receive about 12.7c:$1, with no interest.

Earlier story, 12 June 2015: 12.8c return estimate for NZF noteholders

Attribution: Company releases.

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DNZ buys Newmarket neighbour

DNZ Property Fund Ltd has bought Heartland House in Newmarket for $17 million at a 7% yield. The investment property at 35 Teed St, on a high profile Gillies Avenue corner, is next to DNZ’s property at 25 Teed St.

The corner property combines 2 4-storey buildings containing 7 retail units, 1498m² of office space on 2 upper levels & 103 parking spaces, is 70% occupied by Heartland and is returning $1,172,463/year net. It has a weighted average lease term of 5.5 years, made up of 8.5 years on the office space & 1.6 years on the retail space.

DNZ chief executive Peter Alexander said yesterday: “This acquisition fits well with our strategy. This precinct in Newmarket is one of our preferred locations. Newmarket has extensive private & public transport links and excellent amenity. The acquisition is also immediately accretive to both earnings & weighted average lease term.”

Mr Alexander said the combined holdings provided opportunities to add value over the medium to long term.

DNZ will fund the purchase from a combination of existing bank facilities and divestment of non-core properties. Settlement is scheduled for 30 June.

Photo above: Heartland House at 35 Teed St, Newmarket, in foreground.

Attribution: Company release.

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Leaner DNZ lifts returns & dividends

DNZ Property Fund Ltd lifted operating profit before tax & other income for the March year by 13.1%, an outcome chief executive Peter Alexander described as “a positive result in favourable market conditions and with the support of a leaner, more efficient business.”

He said on Thursday: “DNZ looks forward to a sustained period of progressive growth. The completion of NorthWest Shopping Centre will be a key activity in the coming year and will have a very positive effect on earnings growth. We will continue our targeted divestment programme which, together with the flexibility and capacity in our balance sheet, will enhance our performance and provide better returns in accordance with our strategy.

Financial highlights:

  • Net rental income $57.2 million ($57.4 million), down 0.2%
  • Corporate expenses $6.1 million ($9 million), down 32.2%
  • Operating profit before other income & income tax $39.6 million ($35 million), up 13.1%
  • Net profit after income tax $68.8 million ($41.6 million), up 65.6%
  • Distributable profit before income tax $40.3 million ($35 million), up 15.1%
  • Distributable profit after income tax $32.1 million ($27.7 million) or 10.8c/share (9.67c/share), up 15.9%
  • Cash dividend 10.25c/share (9c/share), up 13.9%
  • 125c/share cash dividend for the fourth quarter has (0.6583c/share imputation credits
  • Loan:value ratio 35.1% (35.0%)

Portfolio highlights:

  • Net 5.1% property portfolio valuation increase on a like-for-like basis
  • Portfolio independently valued at $872.4 million ($780.2 million)
  • NTA $1.81 ($1.69), up 7.1%
  • 203 lease transactions completed over 212,836m² for a total annual rental of $40.4 million
  • 2016 financial year lease expiries at 5.81% of the portfolio contract rental (post-balance date transactions have reduced this to 3.75%)
  • 2017 financial year lease expiries at 13.04% of the portfolio contract rental
  • Occupancy at 96.6% (99.5%)
  • Weighted average lease term 5.1 years (5.5 years)

Developments & divestments:

  • NorthWest Shopping Centre due for completion in October. At 31 March, construction was 70% completed and 100 tenancies confirmed. Forecast valuation on completion $170 million
  • Review of redevelopment options for Johnsonville Shopping Centre, Wellington, hoped to be completed by late 2015
  • $80 million divestment plan underway; divested $32 million of assets in last year

Capital management:

  • Bank facility refinanced during the year with existing banking partners, extending the term of the 2 tranches of $200 million each for a further one year, tranche A now expiring 31 October 2017 and tranche B 31 October 2019; more favourable line fees & margin achieved
    Weighted average cost of debt (including margin & line fees) 5.60% at 31 March

Attribution: Company release.

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DNZ lifts dividend guidance

DNZ Property Fund Ltd has revised its dividend guidance for the March 2015 financial year from 9.5c/share to no less than 10c/share. Last year it paid a total 9c/share.

The company had already made 3 quarterly dividend payments totalling 7.125c/share, but the final dividend will rise to at least 2.875c/share.

Chairman Tim Storey said the increase was largely due to higher net rental revenue from leasing that was better than forecast and revised timing of property sales, together with lower corporate costs & progress on the NorthWest Shopping Centre project at Westgate.

DNZ has previously announced that it will fund development projects & new acquisitions from a combination of current bank facilities and divestment of non-core assets: “Based on sales to date & the latest portfolio valuation, forecast debt levels on completion of NorthWest will be within our target range. The company remains committed to the divestment programme as part of an ongoing repositioning in line with its investment strategy.”

Attribution: Company release.

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