Syndication of big Manukau and Blenheim properties
The ‘ziggurat styled’ office building at 5 Osterley Way, Manukau.
A new property syndication has hit the market involving a large Manukau City office building with an established Crown tenant and a big Mitre 10 Mega retail complex in Blenheim.
The promoter of the scheme is Maat Property Group based in Albany, which already successfully manages eight proportional ownership properties that it has syndicated in the past five years with a combined capital value of $90 million, ranging in value from $4 million to $25.5 million.
The latest offer is for 365 parcels of shares valued at $50,000 per parcel in Osterbama Property Investments Limited, a new company established to buy the two commercial properties at 5 Osterley Way, Manukau and 174-186 Alabama Rd, Blenheim.
“The investment statement and prospectus requires purchasers to subscribe for at least one parcel of 50,000 shares valued at one dollar each,” says Brian Caldwell of Bayleys North Shore Commercial who is marketing the offer with a closing date of 4 pm on March 5.
“The projected annual return to investors is 8.6 per cent to be paid monthly,” Caldwell says. “The syndication may be closed early if fully subscribed.”
The syndication encompasses the purchase of 5 Osterley Way for $18.8 million and the Blenheim Mitre 10 Mega for $13,950,000 for a combined purchase price of $32,750,000 plus GST if any.
In addition to monies raised to purchase the buildings through the syndication scheme, a loan of $15,556,250 will be raised with the ASB Bank.
Aerial view of the Mitre 10 Mega retail complex at 174-186 Alabama Rd, Blenheim.
The sum of $1,056,250 will be set aside for syndication establishment costs, fees and expenses which will include $132,850 of GST to be claimed back from the Inland Revenue Department.
The annual property manager’s fee to be paid to Maat will be 2.76 per cent of gross income and an accounting fee of $10,000 per annum plus GST will also be paid - adjusted annually to the Consumer Price Index.
Caldwell says Jones Lang La Salle valued the Manukau office complex at $18,850,000 and the Blenheim Mitre 10 at $13,950,000 in December last year.
The nine level Manukau office building in Osterley Way was officially opened on August 22, 1979. “Its stepped-back design gave rise to comparisons with a ziggurat - the receding tier design of the early pyramids of Mesopotamia,” Caldwell says. Early tenants included the Crown and the Department of Labour, with the Bank of New Zealand on the ground floor. The Housing Corporation was the early owner and sold the building in 1993.
“The vendor and the Crown combined to plan and implement the complete refurbishment of the building in 2011/2012, in preparation for the Crown extending its lease for a further nine year term followed by three further rights for renewal terms of three years each,” says Caldwell. “Each floor has been refitted for the purpose of the Crown tenant and presents a modern, functional facility for both staff and clients.”
The Crown tenancy is a gross lease earning $1,930,730 plus GST per annum for a term of nine years, expiring in 2021. There are three rights of renewal of three years each which, if exercised, will result in a final lease expiry in 2030.
Vodafone holds a licence to operate a transmitter within the building, paying a current licence fee of $29,100 plus GST per annum. The licence is for a term of six years, expiring on September 30 this year and there are no rights of renewal.
The property is within Manukau’s large retail centre surrounded by commercial premises, a large centre city public area and significant event and entertainment arenas. Close to Osterley Way are two high rise apartment blocks and the new Manukau Institute of Technology which has a passenger rail service on its lower level. Manukau City itself is a densely populated area, with about 400,000 residents.
To the south of Manukau is the industrial and distribution precinct of Wiri. The area is close to the airport and is serviced by a rail-head providing access directly to the Auckland Port.
The Mitre 10 Mega retail store involved in the syndication was constructed in 2006 and is located at 174-186 Alabama Road, Blenheim, on the southern outskirts of the city between Redwood and Riverlea, about 2 km from the CBD.
Mitre 10 (New Zealand) Ltd, with a chain of over 100 home improvement stores throughout New Zealand, holds the head lease on net lease terms, paying current rent of $1,080,000 plus GST per annum. The lease is for a term of 15 years expiring in 2022. There are three rights of renewal of five years each which, if exercised, will result in a final lease expiry in 2037.
Blenheim is well known as the centre of the New Zealand wine industry in the north east of the South Island and has a population of around 30,000 residents. It has one of New Zealand’s sunniest climates, with hot, relatively dry summers and crisp winters.
The eight properties that have already been syndicated and successfully run by Maat are:
- 16 Ha Crescent, Wiri, Auckland - leased to McRae-Global Hydraulics;
- 242 Bush Road, Albany - Thermo Fisher Scientific (NZ) Limited;
- 4 Albert Street, Auckland - Whangarei Work and Income New Zealand, the Child Youth and Family Service, Whangarei District Council, NZ Police and Jenny Craig;
- 2 Phoenix Drive, Whakatane - Bunnings (NZ) Limited
- 26 Karepiro Road, Whangaparaoa - Mitre 10 (NZ) Ltd;
- The Hub, Phoenix Drive, Whakatane - Harvey Norman, Betta Electrical, Farmers Trading, K Mart, Rebel Sports, Briscoes, No. 1 Shoe Warehouse, Postie and Columbus Café;
- 210 Khyber Pass Road - Newmarket Zimmer (NZ) Ltd., Taxicharge (NZ) Ltd, Auckland Primary Health Organisation, The Knowledge Warehouse and Countrywide Monitoring Services;
- 42-45 Jackson Street, Petone - General Distributors Ltd. (Countdown), Pita Pit and St. Pierre Sushi.
Caldwell says all funds received from subscriptions for syndicate shares, including interest earned on those funds, will be held in the trust account of Anthony Harper, solicitors, Auckland.
Brian Cadwell of Bayleys.