Oyster’s Mangere syndication snapped up
Interior view of the large Cardinal Logistics warehouse at 71 Westney Rd, Mangere.
Oyster Group’s chief executive, Mark Schiele has announced that the recent syndication of the large Cardinal Logistics warehouse at 71 Westney Road Mangere has closed early and oversubscribed.
It was the third proportionate ownership scheme offered by Oyster in 2014, projecting annual pre-tax cash returns of 8.1 per cent to be paid monthly.
Schiele says the company made available to investors 276 interests at $50,000 each in the large 2.1397 hectare freehold property at Westney Road, within the sought after Auckland Airport industrial precinct.
The property is 100 per cent leased to Cardinal Logistics, a privately owned storage and distribution company, on a new, 15 year net lease plus three further five-year rights of renewal. Cardinal is a leading logistics provider to the FMCG industry and its customers including Griffins, ETA, Red Bull, Mars NZ, Asaleo Health and General Mills.
Schiele says a combination of elements attracted investors including the location, length of lease, projected return and built in rental growth – all investment criteria which form part of Oyster’s acquisition strategy.
This was the first syndication Oyster has undertaken with a minimum investment of $50,000, with Oyster’s previous syndications requiring a minimum $100,000 investment. Schiele says this was done to open up the opportunity to a greater pool of investors, and it appears to have been successful with many investors new to Oyster having participated.
Canopy area of Cardinal Logistic warehouse at 71 Westney Rd, Mangere.
Oyster has already hit the market this year with its new syndication offering of the ANZ Business Centre in Albany.
Schiele says the $27 million ANZ Business Centre at 9 Corinthian Drive in Albany, is also generating considerable interest from investors. Oyster is offering 312 interests of $50,000 each available, projecting pre-tax cash returns of 8.25 per cent to be paid monthly. ANZ, the anchor tenant, has entered into a new nine-year lease, with a further six-year right of renewal, in the modern five level office building.
“There is no doubt appetite among investors for commercial property is growing significantly and syndications or proportionate ownership schemes are proving an increasingly popular and accessible way for individuals to enter the market,” Schiele says. “In proportionate ownership schemes, investors buy ‘interests’ in commercial properties of significant scale which might otherwise only be the domain of high net worth individuals or institutional investors.”
He believes demand for proportionate ownership schemes is growing at a fast rate in New Zealand for a variety of reasons.
“New Zealanders are typically attracted to ‘bricks and mortar’ investments but clearly investing in large format office, industrial and retail commercial properties are beyond the means of most. However, syndicated property investment structures allow investors to invest in a specific property which appeals to them, Investors with a relatively modest level of capital – often as little as $50,000 – are able to participate in the ownership of commercial property of significant scale and benefit from monthly income distributions.
“Commercial property returns are also seen by many investors as a very attractive complement to lower bank deposit rates and well located assets have proved robust through changing economic cycles.”
Schiele says proportionate ownership of commercial property also continues to be attractive for groups of individuals looking to passively invest in assets of significant value and scale without any of the hassle of day-to-day management because all the work is done by the professional management company.
“Because the properties are fully managed, investors do not need to be experts in strategically evaluating, owning and managing buildings and tenants and many investors invest across a number of syndicates.
“Oyster has a track record of performance through a disciplined approach to managing property and investors’ funds. A recent partnership with Cromwell Property Group is helping the company to build scale and realise its strategy to acquire larger institutional grade assets and present more frequent offers to investors.”
In June last year, Cromwell Property Group, one of Australia’s leading property investment and funds management groups, acquired a 50 per cent interest in Oyster Group. ASX listed Cromwell holds a property portfolio valued at $2.3 billion, as well as a funds management business with $1.2 billion of assets under management.
Oyster manages over $700 million of property assets under management through a combination of private property syndicates and institutional property management mandates.
Mark Schiele from the Oyster Group.