Archive | Gainz

Goodman sells in Christchurch, signs another addition to Highbrook

The Goodman Property Trust announced 2 transactions yesterday – a new industrial development at Highbrook Business Park in Auckland and the sale of a commercial building at 7 Show Place in Christchurch.

Management company Goodman (NZ) Ltd’s chief executive, John Dakin, said: “We’re executing a development-led growth strategy that’s converting the trust’s landholdings into high quality, income-producing properties. Funded through asset sales, it’s repositioning the portfolio and focusing our investment in the Auckland industrial sector.”

Goodman will develop the new 7300m² industrial facility at Highbrook for Plytech International Ltd, a manufacturer & supplier of plywood-based products, which is doubling its space requirements to facilitate its business growth.

The development has a forecast total cost of $11.4 million (construction, and excluding land allocation) and is expected to be completed in November 2018.

“This new project adds to the $107 million of development work currently underway at Highbrook. The volume of activity reflects the strong demand that exists for prime industrial space in Auckland and the unique attractions of this world-class business park,” Mr Dakin said.

The sale of 7 Show Place for $14.5 million continues the sales programme funding Goodman’s development work book. The 3-level 3037m² office building in the Show Place Office Park in Addington, has been sold to a local syndicator.

The transaction is expected to settle in January.

Mr Dakin said completion of all current developments & contracted sales would result in Goodman’s Auckland industrial weighting increasing to almost 85% of its total portfolio, while strategic landholdings represent less than 5%.

Attribution: Trust release.

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Stride defers NorthWest 2 option expiry at Gunton’s request

Stride Property Ltd said today it had agreed to defer the expiry date of Westgate Town Centre Ltd (Mark Gunton)’s 3-year option to acquire Stride’s NorthWest 2 development.

The option was due to expire on Tuesday, 19 December, but will be extended to a date in the new year which depends on the outcome of Stride’s discussions with Mr Gunton.

Stride developed NorthWest 2 alongside the NorthWest Shopping Centre at Westgate, at what was then the top of Auckland’s North-western Motorway.

Stride chair Tim Storey said the company undertook the development after Westgate Town Centre Ltd granted Stride a conditional right & ground lease for the NorthWest 2 site. Under the agreement, Stride granted Westgate Town Centre Ltd rights allowing it to acquire the development from Stride within 3 years of the ground lease’s effective date (the deadline being Tuesday), at a price equal to 115% of Stride’s total development cost (including holding costs).

In the event that Westgate Town Centre Ltd didn’t acquire the development within the 3-year period, the agreement also permits Stride to obtain freehold title to the land for a nominal $1. In its accounts to 30 September, Stride held the NorthWest 2 development in the consolidated interim financial statements at $36.3 million.

Link: Stride interim report to 30 September 2017 (see accounts page 30, note 11 re NorthWest 2)

Earlier stories:
5 October 2015: Albany settlement helps Stride’s Westgate programme
30 September 2015: Westgate opens for business tomorrow
24 July 2015: DNZ looks to grow investment management as first Westgate project nears completion
11 February 2015: DNZ puts next property on market as NorthWest mall leasing hits 90%

Attribution: Stride release, interim report.

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HNA fails in bid for UDC for lack of transparency

The Overseas Investment Office said today it had declined the Chinese HNA Group’s application to buy UDC Finance Ltd from the ANZ Bank for lack of ownership transparency.

International concerns about HNA’s opaque nature have circled the acquisitive group for months.

TIP-HNA NZ Holdings Ltd – immediate owner Global TIP Holdings 5 BV of Amsterdam – applied under the Overseas Investment Act to acquire 100% of the shares in UDC Finance Ltd from ANZ Banking Group Ltd.

ANZ agreed in January to sell UDC, plus the Esanda name & trademarks in Australia & New Zealand, to HNA for $660 million.

But the Overseas Investment Office said in its decision today: “The information provided about ownership & control interests was not sufficient or adequate for the OIO to determine who the relevant overseas persons are for TIP-HNA’s application to acquire UDC.

“We were therefore not satisfied that the investor test in section 18 of the Overseas Investment Act was met. Without knowing who the relevant overseas person is, the OIO cannot be satisfied that section 18 has been met, therefore we are unable to grant consent.”

The decision was delegated to the Overseas Investment Office as it involved significant business assets only. TIP-HNA can apply to the High Court for a judicial review of the decision. The Overseas Investment Office said it would publish copies of decision documents on its website early in the New Year.

ANZ assesses options

ANZ group executive & NZ chief executive David Hisco said: “While the sale agreement between the parties remains in place, unless HNA successfully overturns the OIO decision the sale will not proceed.

“We don’t know if HNA will attempt to overturn the decision. If the sale does not proceed, we’ll assess our strategic options regarding the future of UDC. It’s a great business and there is no immediate requirement to do anything, particularly given the strength of ANZ’s capital position.

“UDC continues to be a highly profitable & strong business, with great staff & customers, and a growing loan portfolio across a range of industries.

“UDC’s focus remains on its core business of financing vehicles & equipment for people & companies across New Zealand. So, it will be business as usual for our staff & customers.”

Mr Hisco said this OIO decision had no impact on the recently announced $A1.5 billion on-market buyback of ANZ shares. The UDC transaction proceeds are equivalent to about 10 basis points of APRA CET1 capital. If the transaction does not go ahead, ANZ’s 2018 financial year earnings will no longer be adjusted for the sale.”

HNA in pursuit of growth through acquisitions

The HNA Group is based on Hainan Island off the south coast of China and operates globally in the tourism, logistics & financial services sectors. One of its subsidiaries, Hainan Airlines, began a regular service of 3 flights/week between Shenzhen & Auckland on 31 December 2016. In October 2016, HNA agreed to buy 25% of Hilton Worldwide Holdings Inc from asset manager the Blackstone Group LP for $US6.5 billion.

HNA Group was founded on the business of Hainan Airlines Ltd in 1993 and has grown through acquisitions over the last 6 years into an international conglomerate with $US90 billion of assets. TIP Trailer Services is a European transport & logistics arm of HNA.

Links:
OIO, 21 December 2017: Overseas Investment Office declines consent to TIP-HNA
HNA Group
Bloomberg, 11 December 2017: HNA unit bonds fall to record amid concern of lender support
7 December 2017: HNA rules out default in coming years after yield surge
China Human Rights Accountability Centre, 15 August & 19 October 2017: Open letter: Call for investigation into HNA Group’s activities in the US and probable links with corruption at top of Chinese Communist Party

Earlier stories:
12 January 2017: ANZ sells UDC Finance to Chinese HNA Group
30 October 2016: Hainan conglomerate adds Hilton stake to its international expansion

Attribution: OIO & ANZ releases, HNA.

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China Construction Bank registers second NZ entity

The Reserve Bank today registered China Construction Bank Corp, incorporated in China, to provide banking services in New Zealand. It will operate in New Zealand as a branch.

A New Zealand-incorporated subsidiary, China Construction Bank (NZ) Ltd, has been registered to provide banking services in New Zealand since July 2014.

For the 9 months to September, the subsidiary disclosed today that it lifted its operating income from $6.46 million in 2016 to $19.39 million, and improved from a $778,000 pretax loss last year to a $10.2 million profit. After tax, the 2017 9-month profit was $7.35 million. It had $199.2 million of equity in 2016 after negative retained earnings of $6.2 million, but took equity to $202.7 million this September after adding $3.7 million of retained earnings.

The bank lifted its lending from $523 million at September 2016 to $1.445 billion, total assets from $712 million to $1.6 billion. It’s lifted its provision for impairment from $522,000 to $1.45 million. Customer deposits grew from $21.25 million to $118.9 million. The bank had $782 million of residential mortgages, none at a loan:value ratio over 80%.

The 25 registered banks in New Zealand include 10 branches of overseas banks, 4 subsidiaries & 3 branches of Australian banks, Bank of China (NZ) Ltd and the Industrial & Commercial Bank of China (NZ) Ltd as well as the 2 China Construction entities, and 5 New Zealand banks not owned elsewhere.

Link: Register of banks

Attribution: Reserve Bank release & register.

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Augusta settles Hub purchase

Augusta Capital Ltd has settled its $44.9 million acquisition of the Hub industrial property at Seaview in Wellington, which it wants to use as a seed asset for a new open-ended industrial fund.

It covers 4.06ha at 17 & 25 Toop St, 101-103 & 109-117 Port Rd, Seaview, and has a net lettable area of 32,600m² of warehouse & office.

Managing director Mark Francis said today the company would release the timing for the initial public offering of the industrial fund in the New Year.

Mr Francis said last week the company was also investigating & undertaking due diligence on several Auckland industrial properties and expected to launch the industrial fund with a mixture of Auckland & Wellington stock, but with a weighting towards Auckland.

Augusta expects the fund to initially raise between $50-70 million of equity. Augusta will underwrite $35 million of that and is working with a consortium of high-net-worth private investors to underwrite the balance.

It will be Augusta’s first open-ended unlisted multi-asset fund.

Earlier story:
13 December 2017: Augusta buys Wellington property as seed for new industrial fund

Attribution: Company release.

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Migrant inflow slips to exact figure of a year ago

New Zealand’s net migrant inflow is back exactly where it was a year ago after the number of long-term migrants both in & out of the country changed by the same figure, 4886.

The identical rise in arrivals & fall in departures in the last 12 months left the net inflow at 70,354 for both the 2016 & 2017 November years.

The net inflow hit 72,402 in the July 2017 year and has been subsiding gradually since then.

Arrivals in November totalled 6751, down by 340 from a year earlier.

Arrivals from Australia slipped by 1000 over the year to 24,936 while exits to Australia rose by 830 to 24,916 – a net gain of 20 over the year, down from a net gain of 1830 in the previous 12 months.

For the last 4 years, there’s been a net gain of NZ citizens returning in November (745 this November, up from 637 a year ago), and the annual tallies have gone close to more Kiwis returning than leaving. From a net exit rate of 39,000 in the 12 months to November 2012, the net exit rate of Kiwis tailed off to just under 24,000 in the November 2013 year, about 8400 in 2014, 1899 in 2016 & 1309 in the last months.

Non-citizen net immigration climbed from about 31,300 in 2010 to 72,253 in the November 2016 year, but has declined to 71,663 in the latest 12 months. Immigrant numbers continued to climb (up 4300 over the year to 99,425), but exits climbed slightly more (up by just under 5000 to 27,762).

Migrants stating Auckland as their destination continued upward – 4902 (4843 last year) for the month, 59,759 (54,765) for the year. The net inflow to Auckland fell slightly for the month to 3253 (3316) but was still ahead over 12 months at 36,294 (33,536).

Attribution: Statistics NZ tables.

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F&P Healthcare signs construction contract for 4th East Tamaki building

Fisher & Paykel Healthcare Ltd said on Monday it had signed a contract for Leighs Construction Ltd to construct the fourth building on its 42ha Auckland campus at Maurice Paykel Place, East Tamaki.

The new building will have a gross floor area of 35,700m² and consist of a mix of research & development, pilot manufacturing and warehousing areas. Groundworks have been substantially completed and construction will start in late January, with an expected operational date of 2020.

2300 employees – over half Fisher & Paykel Healthcare’s global workforce of 4100 – work at the campus’s existing 3 buildings. Supply chain, environment & facilities general manager Jonti Rhodes said the new building would accommodate expected growth until about 2023.

“The blend of R&D, manufacturing & warehousing that we have in our existing buildings gives us a very open working environment and helps us work collaboratively across functional groups. It’s a unique, modern way of working that we are looking forward to developing further in the new building,” he said.

The company has also started a building programme in Tijuana, Mexico, where construction of a second manufacturing facility is underway with an anticipated completion date of late 2018. The company has 950 employees in Tijuana, where it’s been manufacturing in a leased facility since 2010.

The total cost of the building projects in New Zealand & Mexico is expected to be about $200 million.

Fisher & Paykel Healthcare designs, manufactures & markets products & systems for use in respiratory care, acute care, surgery & the treatment of obstructive sleep apnea. The company’s products are sold in over 120 countries.

Attribution: Company release.

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Oceania buys Olliver’s St Heliers land

Oceania Healthcare Ltd has entered into an unconditional agreement to buy a vacant 8945m² site (outlined in picture) in St Heliers, Auckland, cleared for redevelopment by Greg Olliver over 10 years ago.

Sale of the land, in 9 titles at 14-22, 28 & 30 Waimarie St, was held up for several years through court battles between Mr Olliver, who headed development group Landco Ltd, and his ex-wife, Sarah Sparks.

Bayleys began marketing the property in October on behalf of the liquidators of entities which owned the sites, which look down to the Waitemata Harbour, where Mr Olliver had planned the development of new houses & apartments.

Oceania said it intended to settle the acquisition this Friday and would develop an integrated aged care facility & retirement village. It will start work immediately on obtaining planning approvals. The land is zoned mixed housing suburban.

Chief executive Earl Gasparich said it was the company’s first greenfield acquisition and would help maintain activity on its development pipeline for the next 7-8 years. Bayleys said the council valuation of the land was $15.6 million, but Oceania hasn’t disclosed the price it’s paying.

Oceania, backed by Australian bank Macquarie Group Ltd and built up by Mr Gasparich to become New Zealand’s third largest aged care provider & 6th largest retirement village operator, listed in May after raising $200 million through its initial public offering. The company said it proposed to use $173.4 million of the $200 million to reduce debt to provide additional flexibility to pursue development projects.

Macquarie invested in this business from 2005-2008, when Eldercare NZ Ltd & QualCare merged to form Oceania. Macquarie agreed to hold 60.3% after listing and is in an escrow arrangement to retain its stake until the day after the results for the May 2018 financial year are announced. Escrow arrangements affecting Mr Gasparich & other senior executives run until either the 2017 or 2018 financial results are announced.

Earlier stories:
7 May 2017: Oceania Healthcare lists
18 May 2009: Half-cent Olliver debt compromise approved
18 July 2008: Todd ousts Olliver from Landco
7 November 2007: Olliver gets approval for St Heliers redevelopment

Attribution: Company release.

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Summerset lifts profit guidance

Retirement village developer, owner & operator Summerset Group Holdings Ltd has lifted its earnings guidance for the 12 months finishing on 31 December, putting underlying profit in the range of $77-79 million. Previous guidance was $72-75 million.

Chief executive Julian Cook said the new guidance represented a 36-40% increase on the 2016 underlying profit. The company has delivered average annual underlying profit growth of 46% since it listed on the NZX in 2011.

Mr Cook said: “We have seen ongoing strength in resales volumes & margins as well as good margins on new occupation right sales. Sales interest & time from contract to settlement remains very good and we expect this to continue into the new year.”

He said Summerset hadn’t provided a forecast for NZ IFRS net profit after tax due to the inherent uncertainty in fair value movement of investment property, a key component of this profit measure.

Underlying profit differs from NZ IFRS net profit after tax: “This profit measure is provided to assist investors in determining the realised & non-realised components of fair value movement of investment property and tax expense in the group’s income statement. Underlying profit is an industry-wide measure which the group uses consistently across reporting periods. Both underlying profit & NZ IFRS net profit after tax are audited.”

Earlier story:
6 October 2017: Summerset says it’s on track for 450 units this year

Attribution: Company release.

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NPT accepts 25% cut to sell Christchurch property

NZX-listed property investor NPT Ltd said yesterday it had accepted an offer from a private investor to buy its Print Place, Christchurch, industrial property for 25% less than its carrying value.

Chair Bruce Cotterill said the NPT board had agreed this property no longer fitted with its preferred strategy and therefore should be sold.

Although the company had achieved higher than average yields on it, “this location & type of commercial property is no longer in strong demand. The property is now experiencing tenancy vacancies and requires substantial capital investment.”

NPT got 3 offers through a tender campaign, and Mr Cotterill said an $8.25 million offer from a South Island investor was deemed most attractive based on a number of factors, including having the fewest conditions attached.

“Although the offer is below the current carrying value of $11 million, it is the view of the NPT board that the sale price achieved allows the company to arrest ongoing losses and to reinvest capital into opportunities which offer better long-term value growth.”

Attribution: Company release.

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