Archive | Sectors

Focus on Northcote in push for affordable home development

Government-owned company HLC (2017) Ltd – the former Hobsonville Land Co Ltd – is pushing hard to increase interest in 5 development superlots at Northcote, in keeping with the new government’s desire to get 100,000 “affordable” homes built over the next 10 years, half in Auckland.

Bayleys Real Estate launched an expressions of interest campaign late last year, seeking private sector partners to develop the 1.58ha in the 5 superlots.

Under Labour’s KiwiBuild policy, The Government wants to get 100,000 affordable homes built within 10 years, half of them in Auckland.

HLC has supervised development at Hobsonville Point, in West Auckland, where over 1000 houses have been built in 5 years. On completion, that 167ha masterplanned development will have 4500 houses & over 10,000 residents.

At Northcote, the focus in stage 1 of redevelopment of the state housing block will result in 298 old state houses being replaced by 400 new ones.

For stage 2, HLC, a subsidiary of Housing NZ Corp, appointed Bayleys to release the 5 superlots, which range in size from 2572-3665m². Registrations of interest close on Friday 16 February.

HLC chief executive Chris Aiken said a shortlist of potential home builder partners would be identified by March and the final selection made in April.

55% of the potential 165 homes in the 5 superlots have to be “affordable”, defined as a maximum price of $600,000 for a terraced home, $500,000 for apartments.

On completion, the whole project will provide about 1200 new homes near the Northcote town centre over a 6-year period.

Earlier stories:
19 September 2016: Unitary plan helps lift Northcote housing target to 1200
16 May 2016: Council & Government join forces to redevelop Northcote land

Attribution: Agency release.

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Eden Terrace deal leads JLL metro year-end sales

JLL’s Auckland metro team ended 2017 with 6 sales on the east & west of the isthmus, in Eden Terrace, Grey Lynn, Herne Bay & Parnell.

They included the $6.8 million sale of a Porters Avenue property in Eden Terrace (pictured).

Isthmus east

Parnell

10 Augustus Terrace, units 2a & 2b:
Features: 2 office units totalling 246m², 8 parking spaces
Rent: $86,000/year net
Outcome: both sold in December for $1.53 million + gst at a 5.6% yield
Agent: Ben Jamieson

15 Bath St:
Features: 375m² mixed-use site, 539m² office building, 14 parking spaces
Rent: $225,000/year net
Outcome: sold in December for $4.2 million + gst at a 5.35% yield
Agent: Ben Jamieson

Isthmus west

Eden Terrace

1A Porters Avenue:
Features: 3371m² site zoned mixed use, 2760m² warehouse, workshop & office
Outcome: sold to an owner-occupier with vacant possession for $6.8 million
Agents: Jarred Hill, Alex Wefers & Nick Cape

Grey Lynn

41C Crummer Rd:
Features: 92m² office unit, 23m² deck, 2 secure parking spaces
Outcome: sold for $624,000, reflecting $6783/m² floor area
Agents: Alex Wefers & Tom Dobier

28 Monmouth St:
Features: 332m² vacant land in mixed-use zone
Outcome: sold to developer for residential purposes for $1.18 million + gst, reflecting $3554/m²
Agent: Alex Wefers

Herne Bay

204-208 Jervois Rd:
Features: 491m² multi-tenanted property, 832m² floor area, hospitality & office tenants
Rent: about $318,000/year net
Outcome: sold for $6.3 million + gst, reflecting a 5.0% yield
Agent: Alex Wefers

Attribution: Agency release.

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Auckland Airport to plough North Queensland sale return into NZ growth

Auckland International Airport Ltd has put a price of $A370 million on its 24.6% stake in North Queensland Airports Pty Ltd and will offer the lot to the other 3 shareholders of the private company.

Auckland Airport chief executive Adrian Littlewood said today: “The sale will enable Auckland Airport to focus attention on growing its New Zealand travel, trade & tourism businesses and to recycle the proceeds into supporting the significant step up in aeronautical investment at Auckland Airport over the next 5 years, that we recently announced along with our aeronautical charges for financial years 2018-22.”

The sale will be subject only to securing necessary regulatory & counterparty approvals (if any) and completed in accordance with the requirements of the North Queensland Airports securityholders agreement.

Auckland Airport said all 3 other shareholders were entitled to buy pro rate shares of the Auckland interest, but 2 – The Infrastructure Fund (which has 20%) & Perron Investments Pty Ltd (5%) – have said they’re prepared to take the whole Auckland 24.6%.

IIF Cairns Mackay Investment Ltd, an entity advised by JP Morgan Asset Management, owns 50% and hasn’t signalled its interest yet. After a strategic review last August, Auckland Airport also undertook discussions with third parties.

Attribution: Auckland Airport release, North Queensland Airports website.

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Bay of Plenty agents end year with 8 sales

Bayleys commercial agents in the Bay of Plenty finished 2017 with 8 sales around Rotorua, Tauranga, Tokoroa & Whakatane.

Pictured: The 17 Gateway West storage facility in Whakatane.

South of the Bombays

Bay of Plenty

Rotorua

Mangakakahi

95 Tallyho St:
Features: 2524m² site in 2 titles, modern 1493m² industrial building, 3 high stud roller doors; leased to Fletcher Steel Ltd for 3 years from August 2017 with rights of renewal to 2029
Rent: $104,000/year net + gst
Outcome: sold for $1.5 million at a 6.93% yield
Agent: Mark Slade

Fairy Springs

25 Bidois Rd:
Features: 1011m² corner site, 1980s-built 350m² storage complex, 10 storage rental units, each with separate roller door access, multiple tenants
Outcome: sold for $268,000 at a 6.57% yield
Agent: Mark Slade

Tauranga

194 15th Avenue, Tauranga:
Features: 414m² site, 4 parking spaces & 1930s 100m² dwelling converted for office use
Outcome: sold with vacant possession for $550,000
Agent: Lloyd Davidson

74 Grey St:
Features: 1060m² prime city centre-zoned site (49m height allowance), 1290m² retail & office building, fully leased to 4 tenants on mixed terms
Rent: $141,187/year net + gst
Outcome: sold for $2.4 million at a 5.88% yield
Agents: Brendon & Lynn Bradley

90 Second Avenue:
Features: 584m² city centre-zoned site, 340m² industrial building occupied by 2 tenants; car valet business occupies rear tenancy and Great Deals Direct Ltd the front, both with leases expiring mid-2018
Rent: $34,632/year net + gst
Outcome: sold for $850,000 at a 4.07% yield
Agent: Lloyd Davidson

Tokoroa

24 Swanston St:
Features: 212m² cbd corner site, 2 adjacent retail premises totalling 175m², hair salon business has been in occupation since the premises were built in the 1970s and a sushi store has been in occupation since 2013
Rent: $19,119/year net + gst
Outcome: sold for $220,000 at an 8.69% yield
Agents: Brendon & Lynn Bradley

Whakatane

17 Gateway West:
Features: 2113m² site in the Gateway industrial precinct adjacent to State Highway 30, 1358m² self-storage complex comprising 106 units of various sizes, trading as EastBay Secure Storage
Outcome: sold for $1.5 million at a 7.93% yield
Agents: Brendon & Lynn Bradley

156 The Strand:
Features: 334m² leasehold site in cbd retail precinct, 590m² 2-level, fully tenanted retail & office building; 14-year ground lease with perpetual renewal rights
Rent: $68,000/year net + gst
Outcome: sold for $500,000 at a 13.6% yield
Agents: Brendon & Lynn Bradley

Attribution: Agency release.

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Bayleys office ends year with 9 sales & 11 leases

Bayleys agents from the North Shore branch have started the year reporting 9 sales & 11 leases in November & December.

5 of the sales and 9 of the leases were on the Shore and at Silverdale. The rest were in Epsom, Grafton, Huntly, New Lynn & Westgate.

Sales

Isthmus east

Epsom

1B Edgerley Avenue:
Features: 357m² mixed-use property
Rent: $40,037/year net + gst
Outcome: sold at auction in December for $1.26 million + gst, yield 3.18%
Agent: Terry Kim

North-east

Rosedale

1-3 Parkhead Place:
Features: 4532m² industrial site, 2424m² building
Rent: $393,400/year net + gst
Outcome: sold in December for $5.1 million + gst at a 7.7% yield, $2104/m² land & building
Agents: Alex Strever, Laurie Burt & Matt Mimmack

4 Piermark Drive, unit D:
Features: 372.2m² industrial unit – office 175m², warehouse 150m², other area 47.2m², 7 parking spaces
Outcome: sold at auction in December for $920,000 + gst, at $2472/m² land & building
Agent: James Kidd

14-22 Triton Drive, unit C2:
Features: 130m² unit – office 90m², warehouse 40m², 3 parking spaces
Outcome: sold in December for $480,000 + gst, at $3692/m² land & building
Agents: James Yu & Alex Strever

14-22 Triton Drive, unit C3:
Features: 237.2m² unit – warehouse 55,9m², office 181.3m², 4 parking spaces        
Outcome: sold in December for $785,000 + gst, at $3309/m² land & building
Agent: Alex Strever

Silverdale

162 Foundry Rd:
Features: 2002m² site, 1032m² building
Rent: about $150,000/year net + gst
Outcome: sold in November for $3.05 million + gst, at 4.92% yield, $2955/m² land & building
Agents: Rosemary Wakeman & Matt Mimmack

North-west

Westgate

Northside Drive, lot 1, unit 6:
Features: 294m² industrial unit, 4 parking spaces
Outcome: sold in November for $990,000 + gst, at $3367/m² land & building
Agents: >Matt Mimmack & Ashton Geissler

Northside Drive, lot 1, unit 4:
Features: 309m² industrial unit, 4 parking spaces
Outcome: sold in November for $1.06 million + gst, at $3430/m² land & building
Agents: Matt Mimmack & Ashton Geissler

South of the Bombays

Waikato

Huntly

3768 State Highway 1:
Features: motel business on 3065m² site, 690m² floor area
Income: $68,000/year net + gst
Outcome: sold in December for $1.25 million + gst at 5.4% yield
Agent: David Han

Leases

Isthmus east

Grafton

14 Burleigh St, part ground floor:
Features: 561m² office, 16 parking spaces
Rent: leased in November for $144,360/year net + gst, $111,080 excluding parking, parking $40/space/week, premises rental $198/m²
Agent: Dean Gilbert-Smith

North-east

Albany

86 Bush Rd, unit U:
Features: 92m² office unit
Rent: leased in December for $29,660/year net + gst, net excluding parking $25,760/year + gst, premises rental $280/m²
Agent: Jane Sims

Birkenhead

65 Birkenhead Avenue, basement:
Features: 200m² industrial space, parking space
Rent: $30,000/year net + gst
Agents: Adam Watton & Adam Curtis

Gulf Harbour

69 Gulf Harbour Drive, unit H:
Features: 145m² retail area, 8 parking spaces
Rent: $38,160/year net + gst
Agent: Terry Kim

Rosedale

5 Beatrice Tinsley Crescent, unit B:
Features: 361m² industrial unit, 5 parking spaces
Rent: leased in December for $50,000/year net + gst
Agent: Laurie Burt

10B Canaveral Drive:
Features: 300m² industrial, 5 parking spaces
Rent: leased in December for $52,000/year net + gst, net excluding parking $52,000, premises rental $173/m²
Agent: James Kidd

7 Vega Place, unit F:
Features: 132m² industrial unit, 2 parking spaces
Rent: leased in December for $23,000/year net + gst, net excluding parking $23,000, premises rental $174/m²
Agent: Laurie Burt

45 William Pickering Drive, unit A:
Features: 340m² industrial unit, 7 parking spaces
Rent: leased in December for $65,000/year net + gst, net excluding parking $65,000/year + gst, premises rental $191/m²
Agents: James Kidd & Laurie Burt

51 William Pickering Drive, unit 9, level 1:
Features: 60m² office space, parking space
Rent: leased in December for $14,000/year net + gst, net excluding parking $14,000, premises rental $233/m²
Agent: Terry Kim

Silverdale

10 Silverdale St, shops 2 & 3:
Features: 262m² retail area, no parking
Rent: leased in December for $98,000/year net + gst, premises rental $374/m²
Agents: Adam Curtis & Adam Watton

North-west

New Lynn

3047 Great North Rd, first floor:
Features: 370m² office, 10 parking spaces
Rent: leased in November for $93,000/year net + gst, $80,000 excluding parking, parking $25/space/week, premises rental $251/m²  
Agents: Chris White & Damian Stephen

Attribution: Agency release.

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Rosedale & Wairau Valley sales

JLL North Shore agent Jaye Miller has completed 2 sales in Rosedale & on Porana Rd in the Wairau Valley.

North-east

Rosedale

4 Orbit Drive, unit E5:
Features: 234m² tenanted office  
Outcome: sold for $1.015 million
Agent: Jaye Miller

Wairau Valley

7 Porana Rd, unit 1:
Features: 150m² industrial unit
Outcome: sold for $436,500
Agent: Jaye Miller

Attribution: Agent release.

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Michael Hill lifts sales but US concerns continue

Jewellery retailer Michael Hill International Ltd increased group revenue by 4.7% and same-store sales by 0.5% in the December half-year, but reiterated concern about its US business, where sales fell 10%.

The trading update combines 5 months of accounting-adjusted sales results plus preliminary sales figures for December. The company will deliver its more detailed half-year results on 22 February.

The company opened 14 Michael Hill stores & one Emma & Roe store during the half-year, taking the total to 347 – 317 Michael Hill, 30 Emma & Roe.

7 of the new stores are in Canada, taking the total there to 83, and 6 opened in Australia, taking the total there to 172. The company added one store in New Zealand for a total 53, and has 9 in the US.

Sales under the Michael Hill brand grew 4.3% and same-store sales grew 0.7% – 3.4% in New Zealand, 4.8% in Canada, flat in Australia, down 10% in the US.

Emma & Roe grew sales by 20.1%, but same-store sales fell 5.4%.

Total sales for the group, now based in Brisbane, were $A341.5 million ($A326 million for the December 2016 half) – Michael Hill $A331 million ($A317.3 million), Emma & Roe $10.5 million ($A8.75 million). E-commerce sales grew by 71% to $A5.6 million.

Chief executive Phil Taylor said the company was in the final stages of its comprehensive brand review, a management review of the findings.

Attribution: Company release.

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Auckland jump pushes home consents over 31,000/year, standalone share drops further

Consents for new homes jumped over the 31,000/year mark in November after being stuck in a 30,000/year band for most of the previous year.

Stats NZ said today the number of new homes consented in Auckland hit a 15-year high of 1450 in November, boosted by apartments. You can check the numbers around Auckland’s 13 wards below.

This rise in Auckland helped lift the national total of new homes consented to a 13-year high.

Consents for new homes & upgrades nationally for the year were worth $930 million more than for the previous 12 months.

Stats NZ construction statistics manager Melissa McKenzie said: “In November, Auckland home consents reached their second-highest level on record. This is beaten only by October 2002, when nearly 2000 new homes were consented due to a much larger spike in apartments.”

Nationally, 3262 new homes were consented in November (3005 in November 2016), including the highest number of townhouses, flats & units on record – 577 – and a 9-year high of 543 apartments.

“November is typically the month with the highest number of new homes consented, as people try to get plans approved before Christmas,” Ms McKenzie said.

“November’s rebound in home consents was driven by apartments, which tend to fluctuate a lot and were particularly low in October.
“Looking at the longer-term picture, building consents for apartments & townhouses have seen double-digit growth year after year, while consents for standalone houses have levelled off.”

Standalone homes’ share of total consents for the year fell from 70.4% in November 2016 to 68%.

The national consent numbers for November & the year to November (previous November & year in brackets):
Total consents for new homes: 3262 (3005), 31,123 (30,399)
Total values for new homes:  $1.118 billion ($1.001 billion), $13.49 billion ($12.561 billion)
Standalone homes: 1870 (1886), 21,178 (21,391)
Apartments: 543 (407), 3137 (2692)
Retirement village units: 272 (205), 1969 (1918)
Suburban townhouses & flats: 577 (507), 4839 (4398)

Auckland residential consents for November, compared to November 2016, and the latest 12 months compared to the previous 12 months:
Region: 1450 (1188), 10,731 (10,137)
Rodney: 89 (55), 1056 (909)
Albany: 255 (286), 2466 (2274)
North Shore: 25 (26), 484 (566)
Waitakere: 66 (84), 537 (664)
Waitemata & Gulf: 388 (155), 1365 (1125)
Whau: 34 (19), 312 (307)
Albert-Eden-Roskill: 36 (104), 703 (699)
Orakei: 67 (42), 261 (297)
Maungakiekie-Tamaki: 138 (21), 746 (306)
Howick: 127 (25), 594 (546)
Manukau: 90 (129), 451 (465)
Manurewa-Papakura: 88 (116), 952 (1062)
Franklin: 47 (126), 804 (917)

All construction for November compared to November 2016, and the latest 12 months compared to the previous 12 months:
Total: $1.881 billion ($1.607 billion), up 17.1%; $20.498 billion ($19.029 billion), up 7.7%
Non-residential: $549 million ($411 million), up 33.6%; $6.609 billion ($5.98 billion), up 10.5%.

Attribution: Stats NZ tables & release.

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Local interest rate rise depends on US action

ASB Bank’s economists have forecast rises in interest rates toward the end of this year, ahead of an increase in the official cashrate (OCR) in early 2019.

ASB economist Kim Mundy said in the bank’s Home loan rate report, out on Monday, longer-term interest rates could move higher this year as US interest rates lift.

“Heading into 2017, our expectation had been for slightly higher mortgage rates by year-end. Key to this was expectations of higher offshore (US) interest rates & ongoing bank funding challenges. However… current mortgage rates are close to where they were in January 2017 (and some fixed-terms are even lower than they were then!).

“So what happened? Firstly, bank funding challenges were already exerting pressure on mortgage rates at the end of 2016/early 2017. However, increasing domestic deposit growth rates later in 2017 saw some of these pressures ease.

“Secondly, the lift in US interest rates was less straightforward than we had anticipated. Despite the US Federal Reserve lifting the Fed funds rate 3 times in 2017, interest rates actually softened as concern over the pace of US tax reform progress grew.

“Now as we face 2018 we are, once again, expecting interest rates to lift over the year. US interest rates are expected to continue lifting (particularly now that the US tax bill has passed). US interest rates tend to impact New Zealand’s longer-term interest rates and, as a result, we are likely to see this pressure flow through to the 3-year-plus fixed rates.”

The Reserve Bank cut the official cashrate from 2% to 1.75% in November 2016 and has held it there. ASB’s economists expect the Reserve Bank to raise the official cashrate in February 2019 – “and, as the OCR is one factor influencing floating & shorter-term fixed mortgage rates, there is a risk that New Zealand’s shorter-term interest rates start to lift ahead of any OCR increases.”

Attribution: Bank report.

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Warehouse’s “improving trajectory” looks illusory, transformation impacts still to come

The Warehouse Group Ltd said yesterday “encouraging” Christmas trading confirmed its “improving trajectory”.

The first comparison, for the retail group’s main outlets, the Red Sheds, indicated a trajectory that’s negative, but over Christmas was less bad.

The second comparison, for the company’s first half (to the end of January), shows a steep decline in returns – down 22-28%, largely resulting from “a significant accrual for a redesigned incentive programme”.

The word “significant” has no place in a statement like this because it signifies nothing. It commonly amounts to “big effort which should be praised”, but in reality should be read as “Big deal! Tell me when you’ve got something solid to say.” The Warehouse has made no attempt here to quantify the cost of hiring new staff & importing foreign executive expertise.

The company talked a year ago about reorganising, and has since focused on “transformation”.

In yesterday’s announcement, when I got to “strong sell-through of seasonal lines” I knew gobbledegook was going to win over a straightforward tally of performance. The quoted phrase’s context: “Year on Year unit sales show an increase of 5.1% with transactions rising 2.9% in conjunction with strong sell-through of seasonal lines.”

I figure statements like that, which have made it through the chief executive to the board, are indeed a strong indication that transformation is needed, but not quite the one they’re talking about.

The strong sell-through was followed by this comment from group chief executive Nick Grayston: “As expected the move from Hi-Lo to Every Day Low Price (EDLP) in the Warehouse ‘Red Sheds’ coupled with a one-time reduction in ranges and consequent clearance activity has resulted in a reduced Average Selling Price, however margin rates on current products have generally improved, and customers’ reaction to the pricing changes and product improvements have been very positive. Further work is in progress around price elasticity with a view to improving gross margins and the one-off clearance of discontinued products is on track.”

Red Shed Christmas same-store sales were down 2.8%, whereas they were down 4% in the first quarter, the 13 weeks to 29 October.

While Mr Grayston said the Warehouse Stationery ‘Blue Sheds’ were preparing for their peak back-to-school trading season – which is annual – he added: “However, we expect sales to be down about 6.5% at the first half based on softer performance of communications & technology segments, and the one-off impact of the integration of the Blue Sheds’ business onto core Red Sheds operating systems at the start of the financial year.”

Mr Grayston said the technology & appliance retailer Noel Leeming continued to perform strongly and outdoor gear retailer Torpedo7 had been steadily improving all year. Torpedo7 founders Luke Howard-Willis & his father Guy sold a majority stake to The Warehouse in 2013 and exited completely in early 2016.

Moving on from what looks like weak Christmas trading by the Red Sheds, a continuing downturn in the Blue Sheds, no indication of how well Noel Leeming did over Christmas and an indication that The Warehouse hasn’t yet got to grips with a small retail chain it fully acquired in March 2016, Mr Grayston was keen to focus on transformation – but warned not to expect benefits too soon: “While we are all keen to start delivering the benefits of our transformation, we have a long way to go, but these are encouraging signs. H1 trading to date has confirmed for us that our customers like and have responded well to our pricing & product changes. We continue to invest in technology and build out the team to execute the next steps in our change programmes.

“Our forecast for first-half (to the end of January) adjusted net profit from continuing operations for the group is $32-$35 million, which is 22-28% down on the comparative continuing operations performance last year.

“The result for the half includes a significant accrual for a redesigned incentive programme, intended to reward better than expected financial performance along with reinforcing specific behaviours necessary to execute the transformation. It recognises the need to retain staff and recruit top global talent through this rapid period of radical transition. If the second half-year performance fails to deliver on our improved outlook, the accrual will be reversed to profit. If not for the accrual, our financial performance in the first half would be close to last year’s.”

A word from the chair

Warehouse chair Joan Withers added: “Many of the operational impacts on profit performance are transitional in nature and not expected to recur. The Warehouse Group is in the process of a fundamental transformation to improve performance & profitability, which is our key focus for 2018.”

The company will issue its full-year guidance along with the first-half financial results on Thursday 8 March.

Earlier story:
12 January 2017: The Warehouse reorganises

Attribution: Company release.

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