Archive | Stride (DNZ)

Investore settles 2 property sales

Investore Property Ltd settled 2 property sales worth $32.6 million last week.

They were on the disposal side of the deal the NZX-listed supermarket & bulk retail investor made with Stride Property Ltd (which manages Investore’s portfolio) to buy 3 Bunnings properties from Stride for $78.5 million. Stride established Investore out of a division of its own business and added a portfolio of Countdown supermarkets to list it in 2016.

Investore settled the $11.1 million sale of the Fresh Choice supermarket at 64 Gorge Rd, Queenstown, early last week, and followed that on Friday with the settlement of its $21.5 million sale of the Countdown supermarket at 17 Chappie Place, Hornby, Christchurch.

Earlier stories:
5 March 2018: Investore sells Hornby supermarket property
2 March 2018: Stride’s 3-property sale to Investore settles
9 February 2018: Investore confirms 3-shop buy from Stride, and signs a sale
13 July 2016: Stride stapled securities & Investore start trading

Attribution: Company release.

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Stride’s 3-property sale to Investore settles

Stride Property Ltd’s $78.5 million sale to Investore Property Ltd of 3 Bunnings properties in Hamilton, Rotorua & Palmerston North settled on Wednesday after Investore shareholders voted on 9 February to approve the deal.

Earlier stories:
9 February 2018: Investore confirms 3-shop buy from Stride, and signs a sale
13 July 2016: Stride stapled securities & Investore start trading

Attribution: Company releases.

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Investore confirms 3-shop buy from Stride, and signs a sale

Stride Property Ltd said yesterday its sale of 3 Bunnings properties at Hamilton, Rotorua & Palmerston North to Investore Property Ltd for a total $78.5 million was unconditional. It expected settlement to occur on 28 February.

99.9% of Investore shareholders’ votes at yesterday’s meeting to approve the purchase were in favour.

Investore said in November it intended to dispose of 3 properties to buy the 3 Bunnings properties, to provide balance sheet capacity for future activities.

Yesterday, Investore said it had agreed to sell the Fresh Choice supermarket at 64 Gorge Rd, Queenstown, for $11.1 million, representing a 4.8% initial yield based on the most recently reported rental as at 31 March 2017 and a 12% premium to the property’s value of $9.9 million in Investore’s 30 September 2017 accounts. The sale is unconditional and settlement is scheduled for 20 March.

Stride established Investore out of a division of its own business and added a portfolio of Countdown supermarkets to list it in 2016. The forward investment strategy was to continue to acquire large format retail properties, a segment of the market identified as offering unique investment attributes.

Earlier story:
15 November 2017: Stride revives plan to sell 3 Bunnings store to Investore amid other capital management initiatives

Attribution: Stride & Investore releases.

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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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Stride revives plan to sell 3 Bunnings store to Investore amid other capital management initiatives

Investore Property Ltd and its creator & asset manager, Stride Property Ltd, engaged in some transactions this week which will see Investore buy 3 Bunnings properties from Stride, along with a number of other capital management issues.

Stride intended to sell the 3 properties to Investore when Investore listed last year, but didn’t get lease agreement in time. The new proposal requires Investore shareholder approval, but a meeting date hasn’t been set yet.

Investore is to buy 3 Bunnings properties at Hamilton, Rotorua & Palmerston North from Stride for $78.5 million at an initial yield of 6.13%, with structured growth of fixed 2.5%/year rental uplift.

Investore’s board is also exploring a possible share buyback & bond offering, and said its guidance of 7.46c/share cash dividend for the 2018 financial year was unchanged.

Stride established Investore out of a division of its own business and added a portfolio of Countdown supermarkets to list it in 2016. The forward investment strategy was to continue to acquire large format retail properties, a segment of the market identified as offering unique investment attributes.

“With this investment mandate clearly established, the board’s focus has been to look for further opportunities to expand Investore’s portfolio and to enhance shareholder returns by optimising capital structure. Investore believes the combination of the proposed acquisition, the capital management initiatives being considered, which include options around the implementation of a share buyback scheme & a bond issue, and repositioning of the portfolio, delivers on this strategy.”

Investore signalled in its 2016 initial public offering product disclosure statement that Stride had intended to transfer its remaining large format retail properties to Investore. However, Stride retained ownership of the identified assets because the terms of transfer couldn’t be agreed with the tenant, Bunnings Ltd, within the timeframe required to align a divestment with the timing of the Investore IPO.

As a material transaction under NZX listing rules concerning related parties, the transaction requires Investore shareholder approval. A meeting date hasn’t been set yet, but the board hopes to get approval for settlement to be concluded by 28 February. It’s engaged Northington Partners Ltd to prepare an independent appraisal report.

Independent Investore directors Mike Allen & Kate Healy managed the sale & purchase agreement negotiation with the Stride board and received independent valuations from Jones Lang LaSalle which supported the $78.5 million acquisition price.

Investore’s board said the acquisition of this Bunnings portfolio would diversify the tenant mix, reducing the Countdown concentration from 81% (as at 30 September 2017) to 73%, with Bunnings equating to 10% of the portfolio contract rental.

The board said the Bunnings’ portfolio would be leased on new 12-year lease terms and provide a higher proportion of structured growth into Investore’s portfolio, with a fixed 2.5%/year rental uplift. Net rent under the new lease starts at $4.81 million/year.

Following settlement of these properties, Investore’s bank loan:value ratio (LVR) is expected to increase from 39% to 46%. The board said: “Although this is below the targeted maximum LVR ratio of 48%, Investore is planning on disposing up to 3 properties to provide balance sheet capacity for future activities, including capital expenditure works, and is exploring the options around the implementation of a potential share buyback scheme. In addition, the board is also considering a bond issue.”

Bunnings retains the right to acquire the properties at year 48 of the lease, on the assumption that a new 6-year lease term is in place.

As a part of the 3 lease restructures, Stride will pay Bunnings $18 million on termination of the old leases & commencement of the new leases, implying a net cost to Stride of $13 million post-tax deductibility. As the payment is a component of investment property, it’s not expected to materially affect Stride’s distributable profit for the year to March 2018.

Stride has retained its other Bunnings property, at Carr Rd, Mt Roskill, where Bunnings has signalled its intent to carry out works within the next 12 months. Subsequent to these works, and subject to changes in the market or other portfolio commitments, Stride said it expected to put this asset on the market at the end of 2018.

Stride chair Tim Storey said the Stride board had reviewed its strategy on ownership of large format retail property and reaffirmed its view that interests in such assets should be held through Stride’s investment in Investore, or sold.

Attribution: Company releases.

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H&M to lead retail revival at Queensgate

Swedish fashion & homegoods retailer H&M will open its third New Zealand store in October, leading in to the return & arrival of a large number of other retailers at the quake-hit Queensgate Shopping Centre in Lower Hutt.

Kiwi Property Group Ltd brought the Swedish listed company, H & M Hennes & Mauritz AB, to New Zealand first, opening an H&M store at its Sylvia Park shopping centre in Auckland a year ago. Philip Carter’s The Crossing development in Christchurch, which incorporates offices and food & beverage outlets in a precinct which combines new & restored heritage buildings, opened the second H&M this month.

Queensgate, managed by Stride Investment Management Ltd for the Diversified NZ Property Trust, will open its H&M on Thursday 26 October, in 2700m2 on 2 levels in the Centre Court.

The Diversified trust bought the former Westfield mall from Scentre Group (NZ) Ltd in August 2016. Part of it was closed after the Kaikoura earthquake in November and a portion of the carpark & its cinema complex were demolished. After a partial reopening, the centre was fully reopened in April.

Stride shopping centres general manager Roy Stansfield said on Wednesday the company was also readying sites at Queensgate for other new stores and stores that were returning, relocating & upgrading: “We expect many of these to be completed before the busy Christmas period. These include Skechers, Bed Bath N Table, Health 2000, Portmans, Merchant, Bed Bath & Beyond and Boost Juice.

Earlier story:
9 July 2017: H&M to open at Queensgate

Attribution: Stride release.

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Investore to give board majority to independents

Investore Property Ltd’s board has proposed adding a third independent director, thus outnumbering the 2 appointed by the company’s manager, Stride Investment Management Ltd.

Stride said on Thursday the Investore board had proposed rebalancing the board – “for the benefit of shareholders & the company” – following discussions with Stride. The 2 parties had to get NZX approval to work their way around related party & associated person rules to change the board structure.

The proposal will go to the vote at Investore’s annual meeting on Friday 8 September.

Investore owns a portfolio of 39 large format stores. Stride Property Group owns 19.9% of Investore as well as its own property portfolio & the management business.

Earlier stories:
29 May 2017: Investore outperforms listing forecast
30 September 2016: Investore completes acquisition of 14 Countdown supermarkets
13 July 2016: Stride stapled securities & Investore start trading
13 June 2016: Stride unveils stapled structure & Investore IPO

Links:
Investore
Stride Property

Attribution: NZX documents.

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H&M to open at Queensgate

Expanding Swedish fashion retailer H&M (H&M Hennes & Mauritz AB) will open its first Wellington store at the Queensgate shopping centre in Lower Hutt this year.

Centre manager Stride Property Group’s shopping centres general manager, Roy Stansfield, said on Friday the announcement marked an important milestone in a large project, which had been a long time in the works: “We’re incredibly excited that a world-renowned brand like H&M has chosen Queensgate as the location for its first Wellington store. It’s testament to the standard of the centre & the opportunities in the region as a whole. Customers & retailers alike have been curious about the works going on in the centre as we prepare for H&M’s opening, so we’re very happy to be able to finally confirm who this new tenant is.”

Stride hasn’t confirmed the store’s opening date yet.

The Diversified NZ Property Trust, which Stride manages, bought the former Westfield mall from Scentre Group (NZ) Ltd last August. Part of it was closed after the Kaikoura earthquake in November and a portion of the carpark & its cinema complex were demolished. After a partial reopening, the centre was fully reopened in April.

H&M has a big international expansion programme underway, with 500 openings completed or planned this year.

Attribution: Company release.

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Meridian cuts space but signs new Customhouse Quay lease

Meridian Energy Ltd will cut the office space it leases at 33 Customhouse Quay, Wellington, by a third from September 2019, but has agreed to a new long-term lease on the balance.

Meridian occupies 4419m² but will cut back to 2933m² under the new 12-year lease that building owner Stride Property Ltd has agreed to.

Stride chief executive Philip Littlewood said both landlord & tenant would look for a new tenant for the 1486m² of level 1 space being vacated.

Attribution: Company release.

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Stride Property makes sound entry into new era

Stride Property Group moved into a new era last year and has reported returns which generally conform to its forecasts. One figure, the after-tax profit, is much higher as a result of value changes which weren’t forecast.

Stride Property Group and the large-format property arm it sliced off, Investore Property Ltd, both listed on the NZX on 12 July 2016, and both are managed by Stride’s real estate investment management business. The company said the group’s stapled structure gave the management side the ability to grow.

Stride Property Ltd retained a 19.9% shareholding in Investore.
Stride also manages the Diversified NZ Property Trust, which was restructured. It settled on the acquisition of the Queensgate & Chartwell shopping centres.

  • Profit after tax $56.9 million, up $25.9 million on forecast (primarily due to a net change in fair value of Stride’s investment properties)
  • Distributable profit after tax $37.7 million, up $400,000 on forecast
  • Combined annual cash dividend for Stride Property Group of 9.96c/share for the 2017 financial year
  • Targeting a combined 9.91c/share cash dividend for the 2018 financial year
    Net 2.7% property portfolio valuation increase.

Financial performance highlights (forecast figures in brackets):

Stride issued an explanatory memorandum on 10 June 2016 and has compared actual March 2017 results with the prospective financial information in the memorandum (in brackets). The 2017 actual statement of comprehensive income individual lines include discontinued operations from pre-demerger of Investore Property for comparative purposes.

  • Net rental income $63.6 million ($63.3 million)
  • Management fee income $8.5 million ($9.2 million)
  • Corporate expenses $15.6 million ($15.4 million), including $3.5m one-off project costs
  • Profit before other income & income tax $37.5 million ($37.4 million)
  • Profit after income tax $56.9 million ($31.0 million)
  • Distributable profit before income tax $45.5 million ($45.4 million)
  • Distributable profit after income tax $37.7 million ($37.2 million), equating to 10.33c/share (10.21c/share).

Portfolio highights (Stride Property Ltd 2016 financial year figures in brackets):

  • Net 2.7% property portfolio valuation increase
  • Loan:value ratio 38.8% (41.7%)
  • Net tangible asset backing/share $1.67
  • 270 lease transactions over 246,287m² for a total annual rental of $50.1 million
  • 2018 financial year lease expiries at 10.21% of the portfolio contract rental
  • 2019 financial year lease expiries at 8.72% of the portfolio contract rental
  • Occupancy at 96.8% (99.6%) reflects vacant office space at NorthWest Two, Westgate, and vacancy at 460 Rosebank Rd, Avondale
  • Weighted average lease term 4.9 years (7.9 years) reflecting the demerger of Investore.

Link:
Stride Property 2017 annual results

Attribution: Company release, annual report.

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