The Warehouse has placed its 21.7ha North Island Distribution Centre at Wiri, South Auckland, on the market for sale through Colliers International, along with three retail stores in Snells Beach, Palmerston North and Queenstown.
The properties, which will all be leased back to The Warehouse, generate some $8.5 million in total net annual rental income and offer investors the strong tenant covenant of one of New Zealand’s largest publicly-listed retailers.
Fiona Shilton, General Manager Property at The Warehouse, says the property sales will allow the company to continue its strategy of reinvesting in its core retail business, while retaining the distribution centre and retail stores on long term leases.
The distribution centre
Peter Herdson, Charles Cooper and Greg Goldfinch of Colliers International are marketing the distribution centre, on two titles at 13 Bolderwood Place and 92 Langley Road, Wiri, for sale by deadline private treaty closing on July 26. The property returns $6.2 million in net annual rental income.
The Warehouse will take a new 20 year lease to the property on settlement, with the right to renew the initial term for three further terms of 10 years each. Potential income growth is also on offer through annual CPI-linked rent reviews, with market reviews at year 10 and on lease renewals.
The distribution centre is critical to the operation of The Warehouse’s 89 stores, Shilton says. “This facility is integral to our ability to grow revenue and satisfy our customers for many years into the future,” she says.
Herdson says the property offers an ideal long term, income-generating investment. “The sale of the distribution centre offers a substantial and secure return, future-proofed through the inclusion of rent reviews every year and a long lease to a stable, national-name tenant.”
Two freehold titles – a main title of 19.3ha and a secondary title of 2.4ha – make up the property. Five hectares of development land are included within the larger title, providing further flexibility for the property’s owners in the future.
Dual street access is provided along the property’s substantial road frontage and the main trunk railway line runs directly alongside the north eastern boundary of both titles.
The main warehouse comprises 48,000sq m of floor area plus 11,500sq m of mezzanine area, with a stud height of 8.7m at the knee rising to 15.8m at the apex. The apparel warehouse provides 18,000sq m of floor area with a stud height of 10.4m at the knee rising to 12.3m at the apex. Both warehouses have extensive canopies for loading and unloading along with 34,000sq m of yard which is used for container storage. Offices and staff amenity areas including a training room and cafeteria are attached to both warehouses.
The main warehouse was constructed in 1996, with an extension in 1999, and the apparel warehouse was built 2004. Both provide well-presented industrial accommodation, Goldfinch says. “The buildings are in very good condition and being of relatively recent construction are very functional and would suit a wide variety of industrial uses should vacancies arise in the future.”
Together, the two buildings make up The Warehouse’s largest distribution centre, which is the backbone of the company’s nationwide operations, Shilton says. “The centre distributes general merchandise to 57 stores and also deploys consumables and apparel to our 89 stores around New Zealand.”
Over 200 permanent staff ensure the efficient handling of goods, with staff numbers doubling at peak times. The main distribution centre houses over 2km of conveyor belt for handling goods, while over 20 million garments pass through the apparel centre each year, Shilton adds.
The property is a very impressive facility, Goldfinch says. “The operations within the distribution centre bring together technology, automation and manpower for efficient handling of goods on a large scale.”
Trucks and containers are unloaded in a large inward goods area, where around 30 containers a day are unloaded during off-peak times – rising to 60 per day at busy times. The majority of locally-produced goods are dispatched on the same day they arrive, having been put straight on the conveyor for automated sorting and dispatch.
Pallets of goods are stored and monitored by computer, and goods are loaded on to the conveyor to be dispatched out to stores. All conveyors merge at mezzanine level, where a scanner reads the labels and assigns each package to a store location. Packages are then palletised, labelled and sent to designated holding bays for loading on to trucks. Up to 1100 pallets are dispatched every day, equating to around 40 truck loads.
The Warehouse is widely known for being one of the largest retailers throughout New Zealand, and has remained locally owned and operated since the first “red shed” opened in 1982.
The company provides a very strong tenant covenant, says Cooper. “As one of New Zealand’s largest retailers, known and loved by Kiwis for its wide range of products, The Warehouse has been providing Kiwis with ‘a bargain’ for 30 years.”
With 89 stores throughout New Zealand, the company remains a largely New Zealand owned and operated listed entity, employing nearly 8,000 team members from Kaitaia to Invercargill. The Warehouse Group Ltd had adjusted net profit after tax and excluding unusual items of $76 million, on sales of $1.67 billion for the 52 weeks to July 31 2011.
“A business such as this makes the ideal commercial tenant: well-established, large and with plans for further growth,” says Cooper.
The property is strategically located within minutes of two motorways, 10km from Auckland International Airport and 2.5km from Wiri Inland Port, says Goldfinch. “Wiri is an ideal location for many medium to large scale businesses which require direct access to transport infrastructure.”
“With continued growth and the proposed State Highway 20 Waterview extension providing an alternative link through to the North Shore and West Auckland, Wiri’s potential as a valuable industrial location is now established,” he says.
“Some of New Zealand’s best known brands have already discovered the benefits of basing their operations in Wiri, with Croxley, K-Mart, Bridgestone, Frucor, Progressive Enterprises, Downer EDI and Foodstuffs all having premises there.
“The opening of State Highway 20 has seen Wiri gain huge momentum in the past two to three years, to the point where it is now generally recognised as the preferred industrial precinct for large footprint users,” Goldfinch adds.
The limited supply of land in South Auckland should ensure the value of high-quality, well-located industrial facilities is protected into the future, Goldfinch says. “Land in Wiri also offers cost benefits over the more traditional industrial areas in South Auckland, where land prices are at a premium.”
The scale of the underlying land parcel underpins its value, with the site being larger than some of Auckland’s most popular dedicated industrial business parks, he says.
Further industrial development for Wiri is now underway, with Winstone having recently been granted consent for a private plan change to redevelop the former Wiri Quarry into an industrial park.
The property is zoned business 5, allowing for a wide range of activities including industry, motor vehicle sales and service and offices.
The retail stores in Snells Beach, Palmerston North and Queenstown are also offered for sale and will all be leased back to The Warehouse for a 10 year term with five further rights of renewal of three years each.
The 4,776sq m Snells Beach Warehouse store sits on a 1.01ha site at 270 Mahurangi East Road and is offered for sale through John Green and Peter Herdson. Net annual rental income is $546,000 with regular rent reviews built in. The building has been recently modernised, including an exterior repaint and upgrades to the shop front windows, entry lobby and garden centre.
The Warehouse Palmerston North is a large 9,704sq m store on a 2.0ha site, offered to the market via John Green and Adrian van Dyk. Located at 174 Church Street in the centre of town, the property generates net annual rental income of $1,248,000, also with regular rent reviews. The property, which includes a garden centre, has also recently undergone renovation including an upgrade to the front store elevation, external painting and carpark and landscape maintenance.
The 3,579sq m Queenstown store is for sale through Mark Simpson and John Green. The property is located on an 8700sq m site at 12 Hawthorne Dr in the Remarkables Park shopping precinct, situated in the popular Frankton commercial area adjacent to Queenstown International Airport. The modern property generates $465,270 in net annual rental income, reviewed on a regular basis.
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