Oyster Property Group Ltd has launched its proportionate ownership scheme for Pastoral House in Wellington, which it’s conditionally bought from Precinct Properties NZ Ltd for $77 million.
The property fund manager also launches the first of its investor briefings this week for a 60% stake in the Tauranga Crossing shopping centre outside Tauranga. Oyster is offering wholesale investors minimum parcels of $1 million, split into 4 $250,000 interests, and $250,000 increments above that.
For Pastoral House, Oyster is offering 887 $50,000 interests in the scheme to retail investors, for a total $44.35 million, and needs $20 million of sales by 28 February to settle with Precinct.
It’s forecast a pretax cash return of 6% (unaffected in the first 2 years by possible purchase price changes).
The full cost of the acquisition has been put at $82.2 million, including $5.2 million of establishment costs & working capital, to be financed by $44.35 million from investors & a $37.85 million term loan. The initial gearing ratio is 48.4%.
Oyster is providing a $3.6 million underwrite and a second underwrite of $19.65 million is provided by Wyborn Capital Properties Ltd.
The final purchase price still has to be settled – it’s subject to variation by a maximum 2.97% ($2.29 million) up or down once the final measurement of the MBIE (Ministry of Business, Innovation & Employment) tenancies has been completed.
Pastoral House runs from 25 The Terrace through to 92 Lambton Quay in Wellington. The 18-storey tower has 15 tower office floors & 2 podium office levels, ground-floor retail & a podium carpark for a total net lettable area 15,873m².
It’s recently been strengthened to 80% of new building standard & refurbished.
Offices are 100% leased to the Government on a new 15-year lease with MBIE, with fixed 1.5%/year rental increases & a market rent review every 6 years. The ground-floor retail is leased to NZ Post (Kiwibank), the Bank of NZ & 2 cafes.
2 December 2019: Oyster opens Tauranga Crossing investment to wholesale investors
Attribution: Product disclosure statement, Oyster release.