PMG Property Funds Management Ltd will open investment next Tuesday to buy Vodafone NZ Ltd’s South Island headquarters for $58.65 million.
It will be the 8th building in the unlisted PMG Direct Office Fund.
The Tauranga-based fund manager is offering units in the fund at $1.18/unit, with a minimum investment parcel of 10,000 units and 5000 units thereafter. The offer will close on Monday 29 June.
Assuming completion of this transaction, the portfolio will comprise 8 properties with a value of $148.65 million, with 53 tenants across multiple sectors & centres.
The fund is offering 5.5% gross cash distributions for the part-year to March 2021, delivered monthly, and 6.4% for the full financial year to March 2022.
As explained in the product disclosure statement, the projected cash return for the part-year to 31 March 2021 of 6.5c/unit at the issue price of $1.18/unit equates to a 5.5% gross cash yield. The projected cash return for the full year to 31 March 2022 of 7.55c/unit at the issue price of $1.18/unit equates to a gross cash yield of 6.4%.
PMG founding director & chair Denis McMahon said the direct fund offered the security of being invested in land & buildings, of which 75% is underpinned by resilient Government, telecommunications & professional services tenants.
Mr McMahon said PMG had been working on this acquisition for over 6 months. The Vodafone Innov8 office building, in Christchurch, is fully tenanted by Vodafone NZ Ltd’s South Island headquarters on an initial 12-year lease term from August 2016, and has a 5-star Green star rating for office design.
“It will join 7 other quality office properties in the fund, providing investors with a defensive, diversified portfolio of properties with multiple tenants across New Zealand’s main metro centres, Mr McMahon said.
The fund’s strategy is to provide investors with capital preservation & reliable income: “As a manager of unlisted commercial property funds for the last 28 years, we’ve seen & performed through multiple economic cycles,” he said. “We know in the economic times we live in that people are watching their money closely and searching for a defensive investment that provides reliable & regular income.”
PMG chief executive Scott McKenzie said the PMG Direct Office Fund had a proven track record: “Since its launch in 2016, the fund has achieved a year-on-year return of 11.38% to original investors and a 5.45% increase in investor unit value in the last financial year.
“The fund’s strategy over the last few years has been to improve the quality of the portfolio, divesting properties that may have downside exposure during economic headwinds, like we are seeing now, and recycle those funds into higher quality properties or repositioning these buildings & adding value.
“The current climate & the fund’s resilience to date show this has proven to be the correct strategy, as we continue to deliver monthly cash returns to our investors.”
Attribution: Company release.