A proportionate ownership scheme in Westend Industrial Park, a multi-tenanted commercial property in Henderson, West Auckland, is being offered to investors by KCL Investments Ltd.
Investors may apply to purchase one or more of the 308 units, which are available at $50,000 each through the selling agents, Tim Lichtenstein and Charlie Oscroft of Colliers International.
Each title represents an equal proportion of the registered freehold title on the land and buildings of the substantial 5.5ha commercial property, located at 114-152 Swanson Rd, Henderson. A 9.5% projected pre-tax annual return is on offer.
The property is leased to three high-profile tenants: Webstar, Caprice NZ Ltd and Sharp Serviettes. It offers a long term lease profile, with the major tenants’ leases having built-in income growth linked to the consumer price index.
Lichtenstein and Oscroft, who are marketing the syndication on behalf of KCL Investments (the merged KCL Property and Commercial Investment Properties Ltd syndication entity), will leverage Colliers’ expertise in the syndications market as well as the agency’s extensive database to help ensure successful take-up of the offer.
The syndication follows the successful sell-down through Colliers International of proportionate ownership schemes in the Countdown supermarket property in Tokoroa; the Unitec North Shore Campus property in Albany, Auckland; and a large property leased to Good Health Products and other tenants, also in Albany. All were fully subscribed well in advance of the closing date.
Cheryl Macaulay of KCL says she expects the Swanson Rd scheme to be popular among investors, owing to the strength of the tenants and the long lease profile.
“This offering presents an opportunity for individual investors to buy a share of a quality commercial asset which is occupied by solid tenants on long leases. The property provides the opportunity for long term income security for investors, and furthermore offers income growth through rent reviews.”
Two buildings are on the single-titled property; one of which has been extensively upgraded including newly-constructed offices, with the second building newly constructed. Together they make up around 21,000sq m of high and medium stud warehousing, and also provide 920sq m of newly-built offices.
The site offers excellent transport accessibility, Oscroft says. “The property has extensive frontage on to Swanson Rd and four separate access points. Large turning and truck manoeuvrability will be further improved by a road around the perimeter of the site to be completed next year.”
The property also offers future expansion potential, with 4,653m2 of land available for development.
Tenants & leases
Webstar occupies 12,892sq m of high and medium stud warehousing along with approximately 510sq m of new office space on a 12-year term.
The company was established in 1997 and has since grown to become the country’s premier web printing business, Lichtenstein says.
“Webstar has a long-term printing contract with ACP Media. ACP is New Zealand’s leading magazine publisher, which publishes well-known magazines including Woman’s Day, Australian Woman’s Weekly, Next, Taste, Metro and North & South. This underpins the company’s strength as a tenant.”
Caprice occupies a newly constructed warehouse providing 4000sq m of high stud warehousing and 76sq m of offices. The company holds a 12 year lease to the property with expansion rights to the land at the rear of the building.
The company is a home furnishings distributor supplying retailers around New Zealand, Oscroft says. “Caprice distributes products including bed linen, blinds and fabrics to chains including Briscoes, Farmers, Spotlight and The Warehouse nationwide.”
Sharp Serviettes occupies 340sq m of newly-refurbished offices and 3,830sq m of medium stud warehouse for its paper napkin production facility. The company holds a new six-year lease with the right to renew for a further six-year term. Sharp is a major serviette supplier to the New Zealand hospitality sector and supplies its products to homewares and supermarket outlets.
Two remaining vacant warehouse areas are leased by Westend Property Ltd Partnership for a three-year term, while refurbishment and re-leasing is completed. Negotiations are underway with new tenants for these spaces, which total just over 4000sq m, Oscroft says.
FMA changes
The Swanson Rd proportionate ownership scheme comes as the Financial Markets Authority (FMA) considers submissions on its recent decision to overhaul the exemption notice from the Securities Act relating to proportionate ownership schemes in property.
Oscroft says that with Colliers International and its clients having always provided full and comprehensive information on proportionate ownership schemes to investors, the main changes brought about by the overhaul of the exemption notice will be the requirement to register a prospectus and appoint a scheme supervisor.
Charles Cooper, Colliers International’s Auckland managing director, says the company has made a strategic commitment to building the business nationally, bolstered by the expertise and database support located in its Auckland CBD office. “Rather than handling proportionate ownership sales on a reactive basis regionally, we have made a strategic focus at a national level to proactively drive an increase in our market share of the New Zealand syndication sector.
“With over 350 Colliers International commercial property staff in 13 offices in New Zealand, our distribution channels are well-positioned to co-ordinate and tap into the proportionate ownership market and target increased business nationally, along with much higher service levels than the industry has been used to,” says Cooper.
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