A proportionate ownership scheme in Tokoroa’s Countdown supermarket property has closed successfully, with all 85 units taken up a week before the formal closing date.
The property was promoted by Charlie Oscroft and Tim Lichtenstein of Colliers International on behalf of the property syndication entity formed through the recent merger of KCL Property and Commercial Investment Properties Ltd (CIPL).
Phil Hinton, executive director of the merged business, says two other recent supermarket syndication offerings – Countdown Spotswood (New Plymouth) and Countdown Pukekohe South – were also snapped up by investors. “All three Countdown supermarket offerings proved immensely popular and were taken up very quickly, reflecting the quality of the product on offer.”
The combined business runs a management portfolio approaching $800m in size, making it one of the leading players in the New Zealand property syndication market, Hinton says.
The units in the Countdown Tokoroa property were offered at $50,000 each, representing equal proportions of the registered freehold title on the land and building, with a 9% projected pre-tax annual return on offer.
The property is leased back to General Distributors Ltd, the Countdown supermarket operator and a wholly owned subsidiary of Progressive Enterprises, on a 20 year lease term. Lease renewal clauses give Countdown the option to extend for a further 40 years.
The accessibility of the scheme for individual investors, together with the strong tenant covenant, were key reasons the offer was taken up so quickly, Oscroft says. “Investors were attracted by the opportunity to buy a share of a quality commercial asset, occupied by a solid tenant on a brand new, long term lease.”
The property provides long term, non-cyclical income security for investors, Lichtenstein says. “In a sluggish economic climate, supermarkets offer defensive characteristics – while discretionary retailers suffer as consumers rein in their spending, supermarkets are in a ‘necessity sector’ and continue to thrive.”
“Many property investors view supermarkets in good locations as the ideal recession-proof tenants, offering strong income security during uncertain times.”
Countdown Tokoroa is located at 51 Torphin Crescent, in the centre of town. It was built in 2010 and has a net lettable area of 2235sq m on a 10.4ha site. It is located 200m from Tokoroa’s main commercial precinct and serves the town of 14,000 people as well as the wider South Waikato rural community.
General Distributors Ltd is also taking new long-term leases on the Spotswood and Pukekohe Countdown properties. The two stores, along with a further supermarket, Countdown Te Awamutu, were all sold on behalf of General Distributors via Tim Lichtenstein, Tony Allsop and Alan Pracy of Colliers International. The Tokoroa property sold to KCL/CIPL for $7.5m, while the 1.15ha Spotswood property went for $13m. Countdown Te Awamutu was sold to a local private investor for $19.4m.
Colliers International’s syndication business
The Countdown Tokoroa syndication was the latest offering in a national strategic move by Colliers International to drive an increase in market share of the New Zealand syndications business. It follows the successful allocation, before closing date, of all units in two large commercial properties in Albany, Auckland within the past six months.
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