Oyster Syndication is on the Home Straight

5:00 AM Saturday December 5, 2015 Colin Taylor

This Home Straight Business Park building is tenanted by City Fitness, RD1 and the District Espresso & Eatery.

New Zealand commercial fund and property manager, Oyster Group, has launched another major syndicated offer comprising investment interests in the $23 million Home Straight Business Park in Hamilton about 5 kms north of the Hamilton CBD..

Mark Schiele, Oyster’s chief executive, says the proportionate ownership scheme is forecast to provide investors with a pre-tax cash return of 8.4 per cent a year, paid monthly.

Participation requires a minimum investment of $50,000 per interest and there are 255 individual interests available.

The property is valued at $23,050,000 and is located at the end of the Home Straight cul-de-sac extending from the eastern side of Te Rapa Rd. Neighbouring businesses include a modern Bunnings Warehouse and a Mercedes Benz dealership.

Schiele says the Home Straight Business Park consists of two quality office buildings constructed in 2012 that are 100 per cent leased. The Ministry of Education occupies one building and tenants in the second include City Fitness, RD1 and the District Espresso & Eatery, a fully licensed food outlet..

“Nearly 70 per cent of the annual rental income is derived from the New Zealand government tenant and RD1 - a wholly owned subsidiary of Fonterra Enterprises Ltd,” Schiele says.

The Ministry of Education and RD1 have 10 year and eight year leases respectively, both of which commenced in 2012 and include further rights of renewal.

Schiele says investor appetite for quality commercial property like the Home Straight buildings is particularly keen in the current low interest rate environment.

“As of yesterday [Friday, December 4] we are already half full on this equity raise. With interests at $50,000 each there is strong demand and the projected pre-tax cash return is very attractive for this type of investment..

“This is a high quality asset, with diversified income streams from solid established tenants. We see Hamilton as a growth area and have always enjoyed good investor support for property in the region,” he says.

Schiele says Oyster’s focus in recent times has been on making commercial property investment accessible for as many investors as possible. Home Straight is the company’s second public property syndication scheme this year, reflecting the company’s strategy to continue to offer a variety of products and offers which meet a range of investor requirements, from a relatively modest level of capital investment through to substantial, individual investment sums.

“Oyster’s two most recent private placement property syndicates – the Westpac building at 51 Corinthian Drive, Albany and Countdown Lincoln Road – were in high demand and were over-subscribed within days of the Information Memorandum being made available,” Schiele says. “These offers provide small investment groups the opportunity to purchase significant commercial property and typically have a minimum investment of $750,000. They are not publicly marketed but qualifying investors are always made aware of upcoming opportunities.

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The second Home Straight Business Park building is leased to the Ministry of Education.

“Oyster’s commitment to providing a diverse range of offers has continued in recent months, with a view to creating a suite of property investment opportunities which appeal to current and potential investors. Our primary objective remains to enable as many investors as possible to invest in quality, commercial property.

“With historically low interest rates seemingly here for the medium term, investors are seeking alternative options for income and we know commercial property returns are increasingly seen by many investors as an attractive complement to lower bank deposit rates.”

Schiele says the inherent qualities of commercial property also act as a reliable store of wealth over the longer term, and Oyster has a strong track record of well-located assets which have historically proven robust through changing economic cycles.

The Home Straight Business Park property currently generates just over $1.7 million in net annual income. The majority of the leases include rental growth adjusted to the Consumer Price Index or 1 to 2 per cent with a market review every two to three years.

Home Straight is being marketed directly by Oyster to its investor base and through Tim Lichtenstein and Charlies Oscroft of Colliers International.

Chris Dibble, associate director, Colliers International, says office leasing activity in Hamilton has been stable for the past year, with tenants demanding better quality working environments and greater efficiency in floor plates. “Both the Home Straight buildings meet these demands,” Dibble says.

The Home Straight Business Park site occupies a total land area of 10,724 sq m and is relatively flat in contour. It is dominated by the two office buildings with car parking for 265 cars and is on Te Rapa Rd which forms part of north-south State Highway 1 carrying over 14,400 cars past the site daily.

Schiele says Oyster will manage the property and the syndication scheme as part of its national portfolio of close to $800 million in commercial property assets.

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Mark Schiele, of Oyster Group