Oyster Property Group Ltd has closed its latest proportionate ownership offer early – 2 weeks after opening.
Oyster bought the property, ASB Bank Ltd’s C:Drive at 33 Corinthian Drive, Albany, from Stride Property Ltd in December for $50.5 million, and settled on Monday. The 3-level standalone office building, 100% leased to ASB, is now valued at $54 million.
Oyster offered 585 ownership interests at $50,000, for a total $29.25 million.
Chief executive Mark Schiele said yesterday the offer attracted strong demand from both existing & new Oyster investors: “One third of investors who participated in the offer were new to Oyster. The minimum investment of $50,000 opened the opportunity to a large pool of investors, and we were delighted to see so many new investors wanting ownership in a quality commercial property with a tenant of this calibre.”
The forecast pre-tax cash return is 6.5%/year, paid monthly.
Mr Schiele said the offer had several attributes which had immediate appeal for investors: “There has always been strong investor demand for quality commercial property which has outstanding tenant covenant & long-term leases. That, combined with the sought-after Auckland location & the projected pre-tax cash return, satisfied investor criteria.
“We’re obviously very pleased with the speed of the equity raise which reinforces investors’ significant appetite for high quality commercial property. With historically low interest rates remaining on the horizon, investors continue to seek alternative options for income, and commercial property returns are increasingly seen by many as attractive.”
Mr Schiele said 55% of investors originated from Auckland and 25% were from the Bay of Plenty & Waikato.
The C:Drive building sits on 2.1ha and has 10,248m² of lettable area. It currently returns just under $3 million/year net annual income. ASB is on a 9-year lease term to October 2025, with renewals through to October 2043. 2%/year compounded rental increases will be applied every 3 years, including renewals.
Oyster marketed the investment in conjunction with Colliers. Oyster, 50% owned by ASX-listed Cromwell Property Group, will manage the property & the syndication scheme.
21 December 2018: Stride sells Albany property to Oyster, buys Concourse from Goodman
Attribution: Oyster release.