Oyster Property Group Ltd began briefings for wholesale investors last week on interests in a limited partnership that will initially own 60% of the $315 million Tauranga Crossing retail centre on the outskirts of Tauranga.
Oyster chief executive Mark Schiele told investors at the Auckland briefing that $50 million had already been confirmed, of the target $108 million initial investment in a limited partnership which will hold the Oyster-managed interest in the centre, and he expected the sum raised from investors to reach the minimum $73 million required to proceed in the next few weeks.
Target settlement date is 28 February, which can be extended monthly to June. If the $73 million isn’t raised by then, the agreement can be extended again or cancelled.
The investment is attractive for its projected 6%/year returns on the initial outlay, but also for further opportunities. Adding in projected capital return, the forecast is for a 12%-plus annualised total return over the first 3 years.
That prospect is restricted to wholesale investors, required to front with a minimum $1 million (4 $250,000 parcels).
The developers, Richard Stilwell of Auckland & Mark Taylor of Queenstown through their company Tauranga Crossing Ltd, have consents in place to take the main centre to 3 stages of development, and to add 2 more stages to the neighbouring lifestyle centre (bulk retail) by the end of 2022 in a joint venture with the limited partnership.
That will entail further investment by them and also by expansion of the limited partnership being marketed now.
The developers have set investment thresholds for themselves through to early 2021, which is expected to result in the limited partnership’s stake rising to 62.5%, and eventually to 100%.
The Tauranga Crossing site covers 19.5ha at Tauriko, 7.5km south of central Tauranga, and currently has 45,724m²net lettable area.
It began with the first stage of bulk retail opened in 2016, followed by the regional shopping centre’s first stage opened in 2018, expanded in early 2019. The regional centre has over 100 tenancies and a weighted average lease term of 6.6 years. 6 tenants paying 38% of the rent have lease terms over 10 years.
Mr Schiele told investors last week that, as well as the commercial operations, Tauranga City Council had begun talks on adding its facilities to the centre.
It’s an important area for expansion of Tauranga’s footprint. Next to Tauranga Crossing, the Tauriko business estate is expected to have 300 businesses operating on completion, with 5000 staff.
The area also has 2 large residential developments underway. The Lakes Tauranga has low to medium density, is 75% complete and is expected to house 7000 residents on completion. Tauriko West is expected to add 3000 homes on completion by 2023.
The Tauranga Crossing trade area’s population is expected to rise by about 40,000 to 323,000 through to 2033.
3 February 2020: Oyster launches Pastoral House investment
2 December 2019: Oyster opens Tauranga Crossing investment to wholesale investors
Attribution: Briefing, investment documents.