Archive | Gainz

Fletcher Building to present strategy live online from Sydney on Thursday

Fletcher Building Ltd will present its strategy to investors & analysts in Sydney on Thursday at 11am NZ time (9am Sydney time).

The webcast will be screened live online and will be available later on replay on the company website.

Head of communications Leela Gantman said today investors would be able to ask questions live via the webcast facility: “While every endeavour will be made to answer all the questions that are submitted, this may not be possible due to time constraints, and is at the discretion of Fletcher Building management.”

The company will release its annual result on Wednesday 22 August.

Live webcast

Attribution: Company release.

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Augusta industrial fund closes oversubscribed

Augusta Capital Ltd confirmed yesterday that the Augusta Industrial Fund closed oversubscribed with $75 million raised.

Managing director Mark Francis said the acquisition of the initial properties in the portfolio was to be settled later in the day.

As part of the capital raising, Augusta Capital has subscribed for 7.5 million shares and intends to hold a 10% stake as a long-term investment.

Mr Francis said a limited number of investors were reinvesting their funds from other Augusta-managed properties which have sold and would settle in the next month. As a result, Augusta will hold a limited number of shares for the next 2 weeks and then transfer to those investors.

He also said Augusta had received a large number of applications at the close.

The initial portfolio consists of 12 Brick St, Henderson; 862 Great South Rd, Penrose; 20 Paisley Place, Mt Wellington; and The Hub, Seaview, Wellington.

Together, that initial portfolio will have the following key features:

  • a weighted average lease term to expiry of 8.7 years
  • 100% occupancy
  • a diversified mix of 15 tenants, and
  • a 60% weighting to the Auckland industrial market.

Augusta will receive establishment & underwriting fees in connection with the offer as well as ongoing management fees consistent with the NPT Ltd management agreement, which Augusta entered in March.

Image above: 862 Great South Rd, Penrose, back on to Auckland’s Southern Motorway. The area marked in green will be redeveloped.

Earlier stories:
25 May 2018: Transformation hits Augusta bottom line, but confident company lifts dividend
1 May 2018: Augusta industrial fund set to open next week
27 March 2018: Augusta settles NPT management rights payment
12 March 2018: Augusta gets agreement to add 4th building to industrial fund
2 March 2018: Augusta delays industrial fund launch to get fourth property in

Attribution: Company release.

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Commission opens investigation into Fulton Hogan’s Stevenson acquisition

The Commerce Commission has opened an investigation into Fulton Hogan Ltd’s proposed acquisition of Stevenson Group Ltd’s construction materials business.

The commission said yesterday it would consider whether the acquisition would be likely to result in a substantial lessening of competition in any relevant market in breach of section 47 of the Commerce Act. The acquisition is due to be completed by 31 July, but the parties haven’t applied for clearance for it.

Fulton Hogan is one of New Zealand’s largest roading & infrastructure construction companies. The commission said it would focus initially on the potential competitive effects of the proposed acquisition on quarry markets in Auckland & North Waikato.

It would also consider whether any competitive effects arise from Fulton Hogan’s proposed acquisition of Stevenson’s concrete plants, transport, laboratory services and associated plant & equipment.

The commission seeks input to its investigation by Friday 29 June.

The sale would leave Stevenson’s with its property development & mining operations. Its biggest property interest is the 360ha Drury South industrial park it’s begun developing.

Related stories:
7 April 2017: Kiwi Property plans new town centre next to Stevenson’s Drury development
30 August 2013: Drury South industrial area plan change & MUL extension approved

Attribution: Commission release.

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2 new Blackstone funds have $US9.4 billion to invest in Asia

US fund manager Blackstone Group LP closed investment in 2 Asian funds this week – its first Asian private equity fund, Blackstone Capital Partners Asia, on Tuesday, and its second Asian opportunistic real estate fund, Blackstone Real Estate Partners Asia II, on Wednesday.

At $US2.3 billion, the private equity fund is comparatively small – the real estate fund has $US7.1 billion of capital commitments. But the whole of Blackstone’s private equity business has $US111 billion of assets under management.

Coupled with associated commitments from its global buyout fund, Blackstone’s capital partners fund has a minimum of $US3.8 billion of equity to invest in Asia.

Blackstone’s global head of private equity, Joe Baratta, said: “The region continues to experience strong growth compared to other major markets, presenting compelling investment opportunities across sectors.”

Blackstone Real Estate global co-head Ken Caplan said the real estate fund was the largest it had ever dedicated to real estate investing in Asia. He said it gave Blackstone flexibility to pursue a range of opportunities and commit capital with speed & scale.

Blackstone’s real estate business has about $US120 billion in investor capital under management. Its portfolio includes hotel, office, retail, industrial & residential properties in the US, Europe, Asia & Latin America. It also operates a real estate finance platform, including management of the publicly traded Blackstone Mortgage Trust.

Link: Blackstone Group

Earlier stories:
18 May 2018: Goodman & Singapore fund sell VXV portfolio to Blackstone
2 February 2018: Blackstone’s Arena Living buys Mt Eden Gardens
17 February 2016: Blackstone buys Lendlease’s NZ retirement villages

Attribution: Company releases.

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Fed lifts rate to 2%

The US Federal Reserve lifted its federal funds rate target range to 1.75-2% overnight, up 25 basis points on top of a similar raise in March.

At 2%, it’s now above the NZ Reserve Bank’s official cashrate of 1.75%.

At the foot of this story, you can check the shifts in US & NZ central bank rates over the last 3 years.

The US central bank reduced its target range for the funds rate to 0-0.25% in December 2008 and held it there until December 2015. It lifted its target rate to 1.25-1.5% in December 2017.

The rationale

The Fed’s open market committee said in its overnight decision that, since it met in May, information indicated that the labour market had continued to strengthen and that economic activity had been rising at a solid rate.

“Job gains have been strong, on average, in recent months, and the unemployment rate has declined. Recent data suggest that growth of household spending has picked up, while business fixed investment has continued to grow strongly. On a 12-month basis, both overall inflation & inflation for items other than food & energy have moved close to 2%. Indicators of longer-term inflation expectations are little changed, on balance.

“Consistent with its statutory mandate, the committee seeks to foster maximum employment and price stability. The committee expects that further gradual increases in the target range for the federal funds rate will be consistent with sustained expansion of economic activity, strong labour market conditions and inflation near the committee’s symmetric 2% objective over the medium term. Risks to the economic outlook appear roughly balanced.

“In view of realised & expected labour market conditions & inflation, the committee decided to raise the target range for the federal funds rate to 1.75-2%. The stance of monetary policy remains accommodative, thereby supporting strong labour market conditions and a sustained return to 2% inflation.

“In determining the timing & size of future adjustments to the target range for the federal funds rate, the committee will assess realised & expected economic conditions relative to its maximum employment objective & its symmetric 2% inflation objective. This assessment will take into account a wide range of information, including measures of labour market conditions, indicators of inflation pressures & inflation expectations, and readings on financial & international developments.”

Links to Fed economic projections:
Projections (PDF)
Accessible materials

Earlier stories:
10 May 2018: Expect a 1.75% cashrate for some time, says Orr
14 December 2017: Fed lifts funds rate target
15 June 2017: Fed lifts rate again
15 December 2016: Corrected: Fed lifts rate
10 November 2016: Wheeler cuts cashrate to 1.75%
11 August 2016: Wheeler makes 25-point cut & warns of more
17 December 2015: Fed takes rate above zero

Attribution: Bank release.

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Unibail-Rodamco completes Westfield deal

Unibail-Rodamco SE completed the acquisition of Westfield Corp Ltd at the end of last week to create an owner of 102 shopping centres in 13 countries – including some offices & convention spaces, a €62 billion ($NZ104 billion) portfolio.

It doesn’t include the former Westfield mall assets in Australia & New Zealand, moved to the Scentre Group in 2014.

The enlarged mall-owning entity based in Amsterdam & Paris, Unibail-Rodamco-Westfield, describes itself as “the premier global developer & operator of flagship shopping destinations”.

88% of its portfolio is in retail, 7% in offices and 6% in convention & exhibition venues. 56 of its malls are flagships in Europe & the US.


Earlier stories:

25 May 2018: One last step for UnibailRodamco takeover of Westfield
13 December 2017: Unibail-Rodamco strikes deal to buy Westfield

Attribution: Company release.

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Updated: Chow Group to delist

Published 7 June 2018, updated 8 June 2018:
Chow brothers John & Michael lifted their combined holdings above the 90% threshold for compulsory purchase of their NZAX-listed company, Chow Group Ltd, on 31 May and said today (8 June) they intend to complete compulsory acquisition within 3 weeks – by Friday 29 June.

The brothers lifted their holdings from 88.592% to 90.09% on 31 May and said then they would delist the company.

The share price was stuck on 5.8c for the few sales through May, rising to 6c last Wednesday.

Sharemarket operator NZX Ltd still says on its website the NZAX (NZX alternative market) “is the marketplace for small to medium-sized, fast-growing businesses seeking a safe & efficient capital-raising facility”. It says much the same about its NXT market, launched in 2015 to replace the NZAX.

But a year ago the NZX decided to can both its junior markets, forcing participants on to its main board.

Chow Group listed in early 2016 through the reverse takeover of RIS Group Ltd, one of the shell companies listed on the NZAX by broker Brett Wilkinson.

Earlier stories:
17 June 2016: Chow Group records $8 million profit as listed company
11 November 2015: Chows use RIS Group to backdoor list property portfolio

Attribution: Company announcement.

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Juwai questions NZ foreign buyer policy

Now that the New Zealand Government has produced statistics showing a low overall investment in New Zealand residential property by overseas investors, but investment that’s concentrated in specific areas, Chinese international real estate website has weighed into the argument.

Juwai, proclaiming its importance as the exclusive international real estate partner to Chinese online giant Tencent Holdings Ltd, which also operates the WeChat social media site, has used the figures out yesterday to portray a ban on foreign buying as a poor policy for New Zealand to adopt.

You can see this as either a veiled threat or an explanation of reality.

Juwai chief executive Carrie Law. chief executive & director Carrie Law said: “Foreign buyers are important, useful, even vital without being a problem — I think that’s what the data shows.

“Foreign buying tends to be focused where there is lots of new development, making clear again that foreign investment leads to the creation of new dwellings. That’s vital in a market with a housing shortage.

“This data shows that the Government’s plan to ban foreign buying could make worse the housing shortage it is supposed to fix. By discouraging foreign buying, the Government could turn off the flow of money that helps fund new construction in New Zealand.

“Let’s take a moment to appreciate all the benefits of the New Zealand-China relationship. China accounts for 20% of Kiwi exports, delivers $800 million/year in international student spending and provides $1 billion/year in tourist spending, besides funding the construction of new housing.

“Foreign buyers account for about one 10th the number of transactions by local investors. If anyone is driving up prices, it’s your rich dad & uncle, not rich Chinese.”

About Chinese buyers

Ms Law said Juwai statistics for the whole of 2017 showed what Chinese buyers wanted.

“75% of our buyers in New Zealand tell us they are purchasing for their own use. A good school area is a top request for 8% of them. New Zealand is their most favourite country in the world, after the US, Australia, Thailand, Canada & the UK.

“The top cities for Chinese buyers are Auckland, Christchurch, Wellington, Queenstown & Hamilton.”

Juwai showcases 2.8 million listings from 90 countries.


Related story today: 3.3% of March quarter home buyers were foreigners – but 18.7% in central Auckland

Attribution: Juwai release.

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3.3% of March quarter home buyers were foreigners – but 18.7% in central Auckland

Statistics NZ said yesterday 3.3% of home transfers in the March quarter were to people who didn’t hold New Zealand citizenship or resident visas, up from 2.9% in the December quarter.

That low percentage has been the basis of an argument that foreign investors have been of no concern.

But, just as the general rise in house prices around the country has been led by Auckland – and specific areas of Auckland – that’s also where the impact of foreign buyers has been greatest.

Fully foreign buyers (no NZ citizenship or resident visa) numbered 1212 in the March quarter, up from 1158 the previous quarter. Partially foreign buyers (at least one NZ citizen or holder of an NZ resident visa) increased the total by 33,000 in the latest period, 36,800 in the December quarter.

Assuming that the part-Kiwis have come here to live, the focus can be on just that smaller number of fully non-Kiwis.

What the statistics don’t show

In Auckland, 7.3% of purchases in the March quarter were by buyers with no NZ affiliation. The double-digit wards were Waitemata (the central city), where 18.7% of purchases were by full foreigners, Upper Harbour 14.3% & Kaipatiki 10.3%.

There’s no differentiation in the statistics between purchases of apartments & houses in the Waitemata ward, which is material to the value of the statistics. Auckland’s (and New Zealand’s) apartment market has been led by sales through overseas campaigns, particularly through Singapore, Malaysia & Hong Kong. Without those overseas campaigns, most of the city’s big apartment developments would not have got out of the ground.

A second factor which is important but not taken into account is the reason for buying, and the impact of the group of buyers who appear to have a motive other than residence. I have argued over the last 3 years that foreign buyers at auction who have no apparent concern that the price they are paying is well above market will lead a more general rise in prices in that suburb. That’s been happening in some of the most expensive areas of Auckland, such as Remuera, but this year that segment of buyers has been subdued – far fewer in number and far more cautious. The shift has been away from ‘Buy anything, fast’ to ‘Buy an investment, well’.

Exercise being bedded in

Statistics NZ property statistics manager Melissa McKenzie said total transfers fell 9.4%, from 36,279 in the December quarter to 32,880, but the number of transfers to overseas people rose 4.3%.
The proportion of overseas sellers also increased in the March quarter, from 1.3% in each of the first 4 quarters of the new count, to 1.5% in the March quarter.

When Statistics NZ launched its new count in the December 2016 quarter, 90% of the 40,000 transactions were between people whose affiliation to New Zealand wasn’t recorded. The statistics were made more accurate in the March 2017 quarter, when vendors whose affiliation wasn’t know declined to 12.7%. In the March 2018 quarter, the affiliation unknowns were down to 39 buyers.

You can see from that that the statistical exercise is just being bedded in, but also that it’s an exercise that might not mean much (directly) in many areas. The targeting of specific Auckland areas for above-market purchases can flow on to other parts of the city & country. Foreign sales over a number of years have also meant more construction of apartments, now available at a range of price levels.

Ms McKenzie said nearly 10% of all sales in the March quarter were to corporate entities, but information on the ownership of those entities – by New Zealanders or foreigners – wasn’t available. Most trusts buying homes were included in the statistics for individuals rather than corporates, because every trustee must provide information about their citizenship or visa status.

She added another questionmark: “Consultation about amendments to the Overseas Investment Act may have been a factor in recent increases in the proportion of transfers to non-New Zealand citizens & residents. The proposed changes could make it more challenging for overseas buyers to purchase residential land in New Zealand.”

In the March 2018 quarter, the territorial authority with the highest proportion of home transfers to people who weren’t New Zealand citizens or resident-visa holders was Queenstown-Lakes district, with 9.7%. For the year to March, 7% of Queenstown-Lakes buyers were full foreigners and their share in Auckland was 5.7%.

Around Auckland for the year, 12.9% of Waitemata buyers were full foreigners, followed by Upper Harbour on 10.7%, Kaipatiki 7.6%, Devonport-Takapuna 7.4% & Howick 7%.

Real Estate Institute says ban could be counter-productive

Real Estate Institute chief executive Bindi Norwell questioned the merit of restricting sales to foreigners throughout the country and, given the low number of sales to foreigners in Waitemata, there too: “Looking more closely at the Auckland market, Stats NZ highlighted that 19% of sales in the Waitemata board [local board area] in the March quarter were to offshore buyers. This is roughly 85 sales, and even if these 85 properties were sold to local buyers or investors it is still unlikely to significantly impact the overall market.

“As we outlined in our submission to the select committee, if foreign buyers are banned from purchasing property in New Zealand, it could significantly impact development funding which would therefore impact supply and potentially see prices increasing – the exact opposite effect the ban is seeking to have.”

Data collection transferred

Statistics NZ has taken over the analysis & publication of property transfer statistics from Land Information NZ (LINZ). LINZ produced the quarterly Property transfers & tax residency reports from 2016, and has helped Statistics NZ replicate their methodology and enhance the data series.

Links: Amendments to the Overseas Investment Act
Transfer statistics methodology: Datainfo+

Earlier story:
28 May 2018: First statistics on property transfers out in 10 days

Attribution: Statistics NZ release & tables, own observations, Real Estate Institute.

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Oyster goes unconditional on Central Park purchase

The Goodman Property Trust’s $209 million sale of the Central Park Corporate Centre to a joint venture led by property fund manager Oyster Property Group Ltd has gone unconditional.

The trust’s manager, Goodman (NZ) Ltd, announced the sale last November, when one condition remained – Overseas Investment Office approval. Oyster is 50% owned by the ASX-listed Cromwell Property Group.

Settlement is scheduled for 29 June.

Goodman (NZ) chief executive John Dakin said in November the sale represented a significant milestone in the repositioning of the Goodman trust, marking the last of its major identified asset sales.

The property fronts Great South Rd beside the Southern Motorway at the Ellerslie-Panmure roundabout in Auckland.

Earlier stories:
17 November 2017: One condition left on Central Park sale, and Air NZ extends at Fanshawe St
10 November 2017: Big property sale follows first-half profit setback for Goodman

Attribution: Company release.

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