Big Timaru warehouse leased to Fonterra
Aerial view of big warehouse which is for sale at 1-7 Fraser St near Timaru’s port.
A giant warehouse leased to Fonterra and generating over $1.4 million in annual rent is for sale near the port of Timaru in the South Island.
The property, on a 3.1 hectare industrial-zoned waterfront site at 1-7 Fraser St, is being marketed by industrial brokers Brad Johnston, Greg Goldfinch and Sam Staite of Colliers International via a deadline private treaty closing on May 20 unless it sells earlier by negotiation.
“This property contains a massive 21,450 sq m warehouse which Fonterra uses as a storage and distribution base. Its sale represents a significant buying opportunity because investment properties of this size and quality hardly ever come up in the main cities, let alone in provincial centres,” says Johnston.
The building, which is believed to be one of the largest warehouses in the South Island, was constructed in 2005 and comprises three separate internal areas of equal sizes. The warehousing space is high quality and well presented, with a high stud, good natural light and roller door access. A fully-enclosed drive-through lane offers sheltered truck access along the entire length of the building.
Offices and amenities are provided over two levels and the property also contains a yard for container storage and parking.
Johnston says Fonterra has occupied the property for the past 10 years with the lease extending to April 2038 if all rights of renewal are exercised.
“Along with the property’s location near the port and its high-quality, modern construction, this commitment by a global dairy heavyweight makes the property a superb passive investment.”
Johnston says the lease to Fonterra will be a top attraction of the property.
“Fonterra is a household name with over 16,000 staff worldwide, and annual output of more than two million tonnes of dairy products. As far as tenant covenant goes, it simply doesn’t get much better than this for investors.”
The property generates annual net income of $1,433,189 million, with three yearly rent reviews to the Consumer Price Index plus 1.5 per cent per annum. The current 15-year lease term dates from May 2005, with three rights of renewal of six years.
Staite says the property is located in a strategic spot just south of the Timaru Port and southeast of the town’s CBD.
“The site provides easy access to the port and State Highway One and is adjacent to a rail siding. Having access to rail, road and sea transport makes it a prime site for industrial occupiers.”
The site is also located only 30 km away from Fonterra’s Clandeboye dairy factory, which is one of the co-operative’s largest manufacturing sites handling 40 per cent of the South Island’s milk processing.
Goldfinch says the building will be of interest to investors given its size, tenant covenant and the scarcity of prime, well-leased industrial property assets in the traditional main centres.
“Within this asset class and price bracket, we consider the investment qualities of this property to be very attractive,” Goldfinch says. “Its strategic position also makes it an ideal cornerstone holding for any investor’s portfolio..”
Staite says he expects strong demand from investors nationwide. “The property’s strong fundamentals will place this asset firmly on the radars of both local and national buyers. With competitive funding rates still on offer, buyers will view the timing as excellent to secure this building as a long-term, income-generating holding.”
Ports of Tauranga recently announced a 50-50 joint venture with Kotahi, the logistics company owned by Fonterra Cooperative Group and Silver Fern Farms, extending a relationship that includes joint ownership of the Timaru Port facility.
“With this in mind, we believe this warehousing complex will be strategic for years to come,” Staite says.
Brad Johnston (left), & Greg Goldfinch of Colliers (right).