Archive | Investore

Investore sells South Dunedin Countdown

Investore Property Ltd has an unconditional agreement for the sale of its Countdown supermarket in South Dunedin, 10 months after a tender for it closed.

The sale of the property at 323 Andersons Bay Rd is for $19.328 million, representing an initial yield of 6.26% & a 5.6% premium over the $18.3 million valuation in the March accounts. Settlement is scheduled for 1 April 2019.

Philip Littlewood, chief executive of Investore’s manager, Stride Investment Management Ltd, said the Dunedin sale completed the divestment programme Investore announced in November 2017, associated with the purchase of 3 Bunnings-operated properties for $78.5 million in February 2018.

To buy the Bunnings properties, Investore decided to sell this Countdown, another one in Christchurch and the Fresh Choice in Queenstown. Sales of the other 2 were settled in March for $32.6 million.

The South Dunedin Countdown sits on 10,298m² and has a 4071m² floor area. The tender documents showed it was returning $1,225,375/year net + gst and had a 14.7-year weighted average lease term. Even after its sale, Countdown stores still dominate the Investore portfolio. At the March balance date they represented 73% of contract rent.

Earlier stories:
21 November 2018: Investore lifts rent but profit slips
6 August 2018: Investore launches share buyback
26 March 2018: Investore settles 2 property sales
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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Investore lifts rent but profit slips

Investore Property Ltd increased net rent but saw its profit decline, both before & after tax, in the September half-year.

Result highlights, issued Monday:

  • Net rent up 9.5% to $24 million ($21.96 million)
  • Pretax profit down 11.1% to $13.1 million ($14.7 million)
  • Comprehensive after-tax income down 12.6% to $9 million ($10.3 million)
  • Basic & diluted earnings/share down 14.2% to 3.81c (4.44c)
  • Net tangible asset backing/share $1.64 ($1.64)
  • Loan:value ratio 42.2%, policy maximum 48%
  • $100 million 6-year bond issued on 18 April
  • $70 million bank debt refinanced, maturity extended to 2022
  • Annual cash dividend guidance of 7.46c/share for year ending 31 March 2019
  • Investment portfolio $740.4 million ($738.3 million)
  • Net assets $426 million ($429.1 million)
  • Occupancy 99.9% (99.9%)
  • Weighted average lease term 12.6 years (13.1 years)
  • 12-month share buyback programme of up to 5% of Investore’s ordinary shares begun, currently paused.

Website: Investore

Attribution: Company release, half-year report.

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Investore launches share buyback

NZX-listed large format retail property investor Investore Property Ltd, owner of 40 Countdown & Bunnings premises, said last week it would begin a one-year onmarket share buyback programme for up to 5% (13 million) of its ordinary shares, starting today.

Investore chair Mike Allen said the board felt a buyback at current market prices was an efficient use of balance sheet capacity.

The shares traded on Friday at $1.54c, 10c below net asset backing.

Investore’s 19.9% shareholder, Stride Property Ltd, confirmed it didn’t intend to participate in the share buyback, and would rely on the Takeovers Code class exemptions notice allowing it to reduce its holding below 20% within 6 months of exceeding that threshold.

Mr Allen said Investore would co-ordinate the pausing of the buyback offer with Stride to enable Stride to begin any required selldown to comply with exemption notice requirements.

The shares were at $1.53 when the company made its announcement on Wednesday, and rose 1c on Friday. The shares had a price spike at $1.57 on 5 June and have risen 18c over the last 12 months.

Net asset backing at the March balance date was $1.64/share, up 9c in a year. Its price:earnings ratio is 8.73.

The company issued $100 million of bonds in April.

Investore had a 41.6% loan:value ratio (LVR) at the March balance date, and the board has set a maximum LVR of 48%.

The company, coming up for its third birthday in October, is also considering additional capital management initiatives “at an appropriate time”, which may include a second bond issue.

Attribution: Company release, NZX.

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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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Investore sets bond rate at minimum

Investore Property Ltd has set the interest rate for its new 6-year bonds at 4.4%, the minimum stated in the indicative terms sheet.

The company has issued $100 million of the senior secured fixed rate bonds, including the full $25 million of oversubscriptions. There was no public pool.

The indicative issue margin range above the 6-year swap rate was 1.5-1.7%/year, and the margin was set at the bottom of that range, 1.5%.

Investore owns a 40-property portfolio of supermarkets & other bulk retail properties. It’s just sold 2 other properties.

Attribution: Company release.

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Investore to launch $100 million bond offer

Listed bulk retail & supermarket investor Investore Property Ltd announced a $100 million bond offer on Monday – up to $75 million, plus $25 million of oversubscriptions.

The 6-year, senior secured fixed-rate bonds maturing on 18 April 2024 will be offered to New Zealand institutional & retail investors. Investore expects the offer to open on 21 March and close on 12 April. There’s no public pool.

Link: Investore bond offer

Attribution: Company release.

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Investore sells Hornby supermarket property

Investore Property Ltd said on Friday it had secured an unconditional agreement for the sale of its Countdown supermarket at 17 Chappie Place, Hornby, Christchurch, for $21.5 million at a 6.26% yield.

The sale price represents an initial yield of 6.26% and a 10.8% premium on the property’s $19.4 million value in Investore’s 30 September 2017 interim financial statements. Settlement is scheduled for Friday 23 March.

This sale is part of a divestment programme Investore announced in November, relating to the $78.5 million purchase of 3 Bunnings properties in Hamilton, Rotorua & Palmerston North. Shareholders approved the Bunnings deal last month and it settled last Wednesday.

The Hornby sale follows on from Investore’s recently announced sale of its Fresh Choice Queenstown property for $11.1 million at a 4.8% initial yield, which represented a 12% premium on the property’s value in Investore’s  September interim financial statements.

The supermarket was completed in 2010 on a 1.77ha site adjacent to the Hornby Hub shopping centre on State Highway 1. It has a 20-year lease from December 2012 to General Distributors Ltd with renewal rights up to 60 years. Sunil Bhana, Mike Houlker & Blair Young of Bayleys handled the sale

Earlier story:
2 March 2018: Stride’s 3-property sale to Investore settles

Attribution: Company & agency releases.

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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 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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