Industrial Portfolio New Zealand
Information Memorandum to Mackersy Property Investors 18 February 2021 The investment offer set out in this information memorandum is not intended to and does not constitute an offer to the public of a financial product. This information memorandum is not a registered prospectus or disclosure document. The investment is only open to Wholesale Investors under the Financial Markets Conduct Act 2013.
An opportunity to own brand new industrial assets in prime locations in Auckland, Hamilton, Mount Maunganui, Wellington, and Queenstown.
5.00% Projected Gross Return Year 1
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Contents
6
The Opportunity
9
Key Investment Details & Key Portfolio Details
10
Investment Structure
12
Lease Terms
13
Tenancy Schedule
14
The Properties, Tenants & Leases
34 Location 36
Investment Model
38
Risks & Considerations
40
Non-public Offer
41 Disclaimer
6
The Opportunity Mackersy Property has strategically secured five properties to be placed into one investment portfolio which will offer investors location, tenant, lease term and asset diversification. The properties are located in Auckland, Hamilton, Mount Maunganui, Wellington, and Queenstown with an attractive weighted average lease term (WALT) of 13.6 years. This rare opportunity to own brand new industrial assets in prime locations with a substantial WALT to A grade tenants is not to be missed.
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Key Investment Details
Key Portfolio Details
Equity Requirement
Property Locations
$100,000 parcels
20% deposit — 26 February 2021 Balance — 25 March 2021
116 Hobsonville Road, Hobsonville, Auckland 198 Totara Street, Mount Maunganui Raynes Road, Rukuhia, Hamilton 410 Eastern Hutt Road, Upper Hutt, Wellington 48 Grant Road, Five Mile, Queenstown
Projected Gross Return
Tenure
5.00% per annum
Freehold Fee Simple
Tenants
Total Site Area
BP Oil New Zealand Limited Downer Utilities Limited Tekplas Limited CDC Pharmaceuticals Limited New Zealand Couriers Limited
33,176m²
WALT
100%
13.6 years
Occupancy
Rent Review Mechanism
100%
Equity Payment
Mixture of fixed annual increases, CPI annual increases and Market reviews Loan to Value Ratio 48.84%
Annual Net Passing Rent $2,178,115 National Building Standard (NBS)
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Investment Structure Settlement
Purchase Price
Settlement of the assets will be staged over the
The total purchase price of the Properties is
year subject to certain settlement triggers such as
$51,261,360 (pre-acquisition costs) which has been
practical completion or issue of titles. Projected
calculated on an annual net income of $2,178,115
settlement dates being:
plus GST as a blended capitalisation rate of 4.21%.
• 116 Hobsonville Road, Auckland occupied by BP to settle 2 March 2021; • 198 Totara Street, Mount Maunganui occupied by Downer to settle 1 April 2021; • Raynes Road, Rukuhia, Hamilton occupied by Tekplas to settle following practical completion and issue of titles – estimated to be mid April 2021;
Equity Requirement The Partnership will require $28,700,000 of investor equity to assist with the purchase of the Properties. The initial 20% of investors’ equity is required by 26 February 2021 to confirm an investors’ involvement in the Partnership. The balance of equity is required by 25 March 2021 to enable settlement of the Properties.
• 410 Eastern Hutt Road, Upper Hutt, Wellington occupied to CDC Pharmaceuticals to settle
Bank Funding
following issue of titles which is linked to a
To assist with the acquisition, the Partnership will
subdivision – estimated to be June 2021; and
obtain term investment funding of approximately
• 48 Grant Road, Queenstown occupied by NZ
$25,035,000 (this may vary depending on the final
Couriers to settle following the vendor exercising
investment structure used). This will be secured by
their option to settle – estimated to be 9 months
a first registered mortgage over the Properties and
time.
General Security Agreement over the Partnerships
The land and buildings (if applicable) of each site (Properties) are to be purchased by a Limited Partnership set up by Mackersy Property (Partnership), from different vendors, Wallace
assets. The loan will initially be interest only to maximise investor returns with an initial loan to value ratio of approximately 48.84%. The loan facilities will be non-recourse so guarantees are not
reports, engineer reports, LIM reports, bank and
ownership. Mackersy Property currently manage
valuation fees are set at $1,948,640 plus GST. See
over 100 commercial properties throughout New
the investment model on page 36. These costs
Zealand for private investment groups and deal
are fixed and the Partnership will not incur further
with over 300 tenants. A management agreement
establishment fees.
will be entered into between the Partnership and
Projected Gross Return
Mackersy Property for an initial term of three years. For managing the Properties on behalf of
The Partnership is projected to provide investors
the Partnership, Mackersy Property will charge a
a 5.00% gross return in the first year of the
management fee equal to 3.32% of the annual net
investment following acquisition of the Properties.
rent ($72,377) plus GST per annum). The fee will
Any tax payable by the Partnership has not
increase in line with the rental income. This fee is
been accounted for. The first monthly payment
included in the investment model on page 36. A
to investors will occur two months following
portion of the management fees are recoverable
settlement (estimated 20 May 2021) and will
under three of the current leases with a total of
continue to be paid monthly. The investment
$34,303 being paid by the tenants. The balance of
model on page 36 includes the projected income,
the management fee will be met by the Partnership
expenses and gross return to investors for years
and has been factored into the financial model on
1—5. It is likely the Partnership will benefit from
page 36.
tax losses relating to depreciation and other tax deductible expenses but the exact amount
Insurance
of those losses is not known at the date of this
Mackersy Property will put in place a policy which
memorandum. It should be noted that the actual
includes full replacement and reinstatement
returns to investors may vary from those shown
insurance with our preferred brokers, Crombie
in the investment model due to variables such as
Lockwood. The Tenants are responsible for
interest rates, tax, unforeseen capital expenditure
premium payments in accordance with the Leases.
and vacancy.
Structure
required by investors.
Management
The Limited Partnership structure is ideally suited
Establishment Costs and
Mackersy Property cover the investment process
to a commercial property investment entity as it
Grant Road Limited (Vendors) with settlements
Investment Model
from beginning to end, providing in-house property
provides the protection of limited liability, simple
scheduled between 2 March to late 2021.
All project establishment costs in connection
and facilities management freeing qualified
liquidity and tax flexibility. Limited liability means
investors from the usual burdens of private
investors, as Limited Partners, are only liable to
Development Company Limited, GR Hope Family Trust and MA Hope Family Trust, Meridian 37 Limited, Richard Burrell and MCS Holdings
with the acquisition such as legal fees, building
the extent of their equity contributions (funds
11 Funds in Funds out Equity
Limited Partner
Limited Partner
Investor 1
Investor 2
Gross
Limited Partner
Limited Partner
Return
Investor 3
Contribution GENERAL PARTNER
Equity Contribution
Shareholder
Shareholder
Investor 1
Investor 2
Shareholder
Shareholder
Investor 3
Investor 4
LIMITED PARTNERSHIP
Day to day operator
Owner Borrower Investor 4 (Limited Liability Company)
invested), plus any other obligations expressed in
of the Properties. The investment model on page
the Limited Partnership Agreement. The Partnership
36 incorporates a directors insurance fee of $2,350
will be established by Mackersy Property prior to
plus GST per annum.
investor funds being received with Units in the Partnership to be issued to investors in proportion to the level of funds contributed following settlement of the Properties. The Properties will be managed by the General Partner which will be a limited liability company set up by Mackersy Property (General Partner). The General Partner will be liable for all of the debts and liabilities of the Partnership and will provide the corporate governance to run the investment professionally and profitably.
Governance The General Partner will be an entity controlled by the Directors of Mackersy Property until settlement of the Properties. Following settlement, a Board of Directors will be appointed from the investment group, which may include an independent director. Any investor wishing to become a director will need to provide a written statement to Mackersy Property setting out their skills and how they can contribute to the governance of the Partnership. Directors insurance will be in place from settlement
The General Partner must obtain 75% approval from investors before making any major decisions affecting the Partnership including any potential sale of the Properties, incurring expenditure in excess of 5% of the asset value of the Properties, appointing any replacement General Partner or varying the terms of the Limited Partnership Agreement.
Unit The investment is for Units in the Partnership which will own the Properties. The Partnership has been structured to provide a total of 28,700 Units at an issue price of $1,000 per Unit. The minimum investment will be $100,000 representing 100 Units but investors may choose as many Units as they wish above 100, subject to availability. Units in the Partnership will be issued to investors following settlement of the Properties. Until such time as the Units are issued, all Units in the Partnership and investor funds will be held on trust for the benefit of investors in proportion to the sum invested.
Net Return
Tax The indicated gross return does not account for tax. Investors may choose to invest directly as a Limited Partner, receiving the full gross return from the Partnership and taking care of their own tax liability. Alternatively, investors may invest through a limited liability company (established and managed by Mackersy Property) that itself will be a Limited Partner in the Partnership. Any investor who chooses to invest through the Mackersy Property limited liability company will receive their returns tax paid. It is likely that investors will benefit from Partnership tax losses relating to depreciation and other tax-deductible expenses that can be passed to investors as Limited Partners, but the exact amount of those losses is not known at this time.
Exit Process/Liquidity Investors will have the ability to sell their Units in the Partnership at anytime, to any person at the maximum value another investor is willing to pay. The investor can then decide on the value they wish to sell their interest for and Mackersy Property will use its best endeavours to find a purchaser of the Units. Transfers to family or related parties
are exempt. Investors will not be subject to preemptive rights to other investors in the Partnership. If and when an investor wishes to sell they will be required to give written notice to Mackersy Property. The investor will then be provided with information regarding any costs of sale along with the latest market valuation of the Properties and a suggested market valuation of their ownership interest at that time. Purchasers will be sought from within the ownership group, from the wider Mackersy Property investor database or interested third parties, subject to those purchaser’s complying with the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 and the wholesale exclusion criteria of the Financial Markets Conduct Act 2013. It is Mackersy Property’s objective to create liquidity by providing investors with a simple, fast and transparent exit process that also has the objective of maximising value to the investor. This process will also enable new investors to enter the Partnership at any time in the future.
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Lease Terms
Auckland
BP | 18 years
Mount Maunganui
Downer | 8 years
Hamilton
Tekplas | 15 years
Upper Hutt
CDC Pharmaceuticals | 15 years
Queenstown
New Zealand Couriers | 9 years
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Tenancy Schedule Tenant
BP
Commencement
Initial
Remaining
date
Term
Term
1 December 2020
18 Years
18 Years
Expiry
1 December 2038
Remaining
Review
Net
% of
Gross
rights of renewal
Mechanism
Rent
Rent
Lettable Area
1 right of 10 years
Annual CPI + 0.5%
$400,926
18%
5,217m²
CPI every
$317,000
15%
7,396m²
and 1 right of 7 years Downer
18 December 2009
20 years
8 Years
18 December 2029
6 rights of 5 years
second year Downer Build
Tekplas
N/A
N/A
8 Years
18 December 2029
N/A
Nil
$17,063
1%
N/A
Upon completion
15 Years
15 Years
est. 1 June 2036
1 right of 5 years and
Market review 5th
$707,226
32%
6,000m²
2 rights of 10 years
anniversary
est 1 June Tekplas Option
Upon completion
10 Years
10 Years
est. 1 June 2031
Nil
Nil
$25,000
1%
N/A
15 Years
15 Years
15 Deember 2035
3 rights of 5 years
2% annual increases
$428,000
20%
2,399m²
$282,900
13%
2,729m²
$2,178,115
100%
23,741m²
est 1 June CDC Pharmaceuticals
15 December 2020
from year 5 New Zealand Couriers
10 January 2020
10 years
9 years
10 January 2030
2 rights of 5 years
2.5% annual increases
Total Income
13.6 Years
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Property 1 116 Hobsonville Road, Hobsonville, Auckland BP Hobsonville occupies a site in the heart of one of Auckland’s fastest growing suburbs. The property is located to the northern side of Hobsonville Road in Hobsonville, Auckland, benefiting from nearby locations including the Hobsonville Point development, Northwest Shopping Centre and Westgate Mega Centre. The surrounding area is predominately rural or residential lifestyle blocks. Development to the south includes large scale industrial warehousing, and to the east consists of residential dwellings zoned as a combination of residential-mixed urban and mixed housing suburban under the Auckland unitary plan. The location has strong transport links including motorway access nearby at Brigham Creek motorway interchange situated approximately 0.5 kilometres from the property. The Partnership will be acquiring the land only and improvements will be acquired and owned by the Tenant. Land Area: 5,217m²
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BP OIL NEW ZEALAND LIMITED The Tenant
The Lease
BP is a leading supplier and distributor of fuel to retail and commercial
An 18 year ground lease has been entered into with one right of renewal for 10
customers throughout New Zealand and the world. Based in the United
years and a further right of 7 years thereafter.
Kingdom, BP trades on the London Stock exchange and has a market capitalisation of GBP51.280 billion. Operating in 80 countries worldwide and producing on average 3.7 million barrels of oil per day, BP is one of the world’s seven oil and gas supermajors.
Income Split by Tenant (BP)
15+13+13220
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18%
Tekplas CDC Pharmaceuticals BP Downer New Zealand Couriers Tekplas Option Downer Build
Property Overview Address
116 Hobsonville Road, Hobsonville
Zoning
Light Industrial
Site Area
5,217 sqm
Lease Type
Ground Lease
Net Rental
$400,926
Lease Commencement
1 December 2020
Lease Term
18 years
Rent Review
Annual CPI + 0.5%
Market review every 5th anniversary cap of 3% & hard ratchet
100% in respect of the premises
Right of Renewal
One (1) right of Ten (10) years, One (1) right of Seven (7) years
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AY W R TO O RM U O RB A H ER P UP
The Urban Jungle
Hobsonville RSA
BRIGH AM CR EEK RO AD Fruit World
AD RO E L VIL N O BS HO
West Harbour Village Wine & Spirits
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Property 2 198 Totara Street, Mount Maunganui This strategic 7,396m² fee simple site is situated in close proximity to the Tauranga Port, New Zealand’s largest port. The property is comprised of several storage tanks and processing plant constructed in 2004, currently used as Downer’s bitumen depot. The main building on the property is a 43m diameter tank with a maximum fill height of 17.5m and a capacity of 23,000 tonne on the eastern end of the site. The steel plate tank shell is set on asphalt and engineered earth fill foundations. Two smaller secondary tanks, a furnace building, gantry crane, offices, bulk plant and implement sheds make up the rest of the site. The structures are connected to a pipeline that runs over neighbouring land to the west leading to the Port where bitumen products are transferred directly from freight ships to site. For clarification, all structures currently on site are owned, repaired, and maintained by the Tenant. These are not Landlord owned items. The Partnership will acquire the land with the tenant owning all improvements. Land Area: 7,396m²
Building
Area
Main bitumen storage tank
1,452m²
Office
150m²
Secondary storage tanks
472m²
Other plant and structures
644m²
Total
2,718m²
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DOWNER UTILITIES LIMITED The Tenant Downer Group has been operating for over 150 years in Australia and New Zealand and has been a leader in the construction, transport and infrastructure industries throughout that period. Downer is an AEX and NZX listed company employing over 53,000 staff in 5 countries. The 2019 financial year showed annual turnover of more than $13 billion
The Lease Property Overview Address
198 Totara Street, Mount Maunganui
Zoning
Port Industrial Zone
Land Area
7,396 sqm
(AUS) and a net profit of over $340 million. Downer are a leading manufacturer and supplier of bitumen-based products and an innovator
Net Rental
in the sustainable asphalt industry. Downer maintain over 25,000 kilometres of road in New Zealand and 36,000 kilometres in Australia through strategic partnerships with Alliance, the New Zealand Transport Agency and local Councils. Downer have been leaders in sustainability and recognised a sustainable and embedded Zero Harm culture is fundamental to the company’s ongoing success. Their Zero Harm policy covers a work environment that supports the health and safety of their people, provides the
$17,063 (Upon completion of capital works)
Commencement
18 December 2009
Remaining Term
8 years
Lease Term
20 Years
Lease Type
Ground Lease
Rent Review
CPI increases every second anniversary Market review on renewals.
background and basis to deliver activities in an environmentally
After renewal taken CPI increases to occur on a five-yearly basis.
sustainable manner and advances the communities in which they operate. Their Zero Harm policy and report is prepared in accordance
$317,000
Right of Renewal
Six (6) rights of five (5) years each
with the Global Reporting Initiative (GRI) standards.
Improvement Works The Tenant has indicated they require a two-storey office building to be constructed on the north eastern corner of the site, being approximately 150m² in area. Pursuant to the terms of the lease, the Partnership is to fund the construction works and on completion will charge an improvements rent for the remainder of the lease term. The cost has been estimated at $3,500/m², giving an overall total completion cost of $525,000 which has been factored into the model on page 36. Additional improvements rent has been incorporated into the model on page 36 on completion giving a boost to the net return from Year 2 of $17,063, which is based on 3.25% of $525,000 estimated cost. Following settlement, Mackersy Property will enter into discussions with the Tenant on the additional improvements required.
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Income Split by Tenant (Downer)
13+1
1%
1 32+2018
15
15%
Tekplas CDC Pharmaceuticals BP Downer New Zealand Couriers Tekplas Option Downer Build
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Property 3 Raynes Road, Rukuhia, Hamilton The property will comprise a purpose built industrial facility situated to the corner of Sharpe Road and Raynes Road, located in close proximity to Hamilton Airport and associated Titanium Business Park development. The building improvements will comprise a modern high specification industrial facility incorporating clearspan factory accommodation with two levels of modern offices and a drive through canopy. The property is located in a developing area where there has been a strong sell down of the Titanium Park industrial precincts over the last two years with a corresponding increase in land values. The proposed Southern Links roading network will further improve the access and profile of the property. There is also easy access to State Highway 21, State highway 1 and State Highway 3. Land Area: 1.5599ha Total lettable area: 6,000m²
Building
Area
Ground office
535m²
First floor office
566m²
Clean rooms
2,366 m²
Rear Warehouse
1,758m²
Canopy
878m²
External Offices
126m²
External Store
649m²
Total
6,000m²
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TEKPLAS LIMITED The Tenant
The Lease
Tekplas was founded over 15 years ago and are an innovative team
Property Overview
that provide New Zealand with plastic moulding products. They offer customised solutions for a range of industries including, food packaging, human health, animal health, agriculture and industrial use. They are using state of the art equipment and innovative technology that no other New Zealand company offers. Tekplas have two purposebuilt facilities, soon to be a third, 29 electric moulding machines and employs over 100 people.
Option agreement The vendor will pay the Partnership $25,000 per annum for a 10-year period. This annual payment allows them the option to purchase 3,685m² of the site ten years after the commencement date of the
Address
Raynes Road, Rukuhia, Hamilton
Zoning
Industrial
Land Area
15,599 sqm
Net Rental
$707,226
Option Rental
$25,000
Commencement
Upon Completion
Lease Term
15 years
Rent Review
Market review on fifth anniversary from commencement with further reviews every three years thereafter
lease. This agreement is conditional upon the tenant not exercising its option to lease the 3,685m² land area if they wish to expand.
Right of Renewal
One (1) right of five (5) years, &; Two (2) rights of ten (10) years each
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Income Split by Tenant (Tekplas)
1 32
20+18+1513 32%
1%
Tekplas CDC Pharmaceuticals BP Downer New Zealand Couriers Tekplas Option Downer Build
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Property 4 410 Eastern Hutt Road, Silverstream, Upper Hutt The Property contains a purpose built, brand-new pharmaceutical warehouse and distribution centre in the Silverstream business park in Upper Hutt. The building has recently been completed with lease commencing in December 2020. The CDC Pharmaceutical building is part of a significant business and industrial estate. Fliway, an international freight and delivery services, has already built a depot in the neighbouring lots. Elgas, a home and business LPG supplier, has taken up another, and more business industrial sites are set to follow. In the surrounding area, a development in the Pinehaven Hills has been proposed to the Upper Hutt City Council for a residential development of over 1000 houses in the neighbouring hills, which should lead to an influx of activity to the surrounding Pinehaven and Silverstream suburbs. With proximity to Wellington, Upper Hutt and Lower Hutt, along with access to a railway and an arterial route of the New Zealand roading system in the form of State Highway 2, this site is centrally connected, while still retaining some key rural amenity. Land Area: 4,512m² Total lettable area: 2,399.2m²
Building
Area
Warehouse
2,057.7m²
Ground floor Amenities
152.3m²
Office
189.2m²
Canopy and Dispatch
151m²
Yard and Parking
1,965m²
Total
2,399.2m²
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CDC PHARMACEUTICALS The Tenant
The Lease
CDC pharmaceuticals was established in 1927 and is a wholesaler
Property Overview
of pharmaceutical and over the counter (OTC) products to the New
Address
410 Eastern Hutt Road, Silverstream, Upper Hutt
Zoning
Industrial
Net Lettable Area
2,399 sqm
than 300 pharmacy and hospital customers.
Net Rental
$428,000
Covid-19 accelerated CDC Pharmaceuticals operations, in the 2020
Commencement
15 December 2020
Lease Term
15 Years
Rent Review
2% annual increases from year 5
Right of Renewal
Three (3) rights of five (5) years each
Zealand medical sector. CDC’s headquarters is in Christchurch with distribution centres in Wellington, Napier, New Plymouth and Wanganui covering a large part of New Zealand. They are able to receive, pick and order over 110,000 items every day and provide their services to more
financial year CDC’s profit after tax was $734,000 up from $221,000 in 2019. As at 31 March 2020, CDC Pharmaceuticals held total assets of $114 million with a net equity position of $15.8m.
Income Split by Tenant (CDC)
20
18+15+13132 20%
Tekplas CDC Pharmaceuticals BP Downer New Zealand Couriers Tekplas Option Downer Build
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Property 5 48 Grant Road, Five Mile, Queenstown The New Zealand Couriers distribution centre is a purpose-built facility in Queenstown’s fastest growing and well established commercial precincts, Five Mile. This building was completed in late 2019 and is constructed from a concrete tilt slab design with a steel framed colour steel roof. The floors are constructed of 150mm thick 30 MPa reinforced concrete with a high-quality office and amenity space. The site has 13 carparks with an additional 2 accessible parks. The lettable area is 2,729m² which includes a large Canopy area to the rear of the property. Land Area: 2,729m² Building area (with canopy): 1,340m²
Building
Area
Warehouse
816m²
Canopy
430m²
Office
148m²
Yard
1,073m²
Landscaped area
262m²
Total
2,729m²
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NEW ZEALAND COURIERS LIMITED The Tenant NZ Couriers, ultimately owned by listed entity Freightways is positioned as the premier provider of network courier services to New Zealand businesses. Specialising in express parcel delivery, service standards range from 2.5 hours for local deliveries, to overnight by 9.30am for nationwide deliveries. New Zealand Couriers sits at the premium
The Lease Property Overview Address
48 Grant Road, Five Mile, Queenstown
Zoning
Light Industrial
Site Area
2,565sqm
Net Rental
$282,900
Lease Commencement
20 Jan 2020
Lease Term
10 years
Rent Review
Annual 2.5% increases, Market review in 2023 (currently under rented)
Right of Renewal
Two (2) rights of Five (5) years each
service/premium price end of Freightways’ multi-brand strategy. New Zealand Couriers is Freightways’ largest brand by revenue and operating earnings. For the 2019-2020 financial year, Freightways had an annual turnover of $630.9 million with net assets of $316.7 million. They have a market capitalisation rate of $1.827 billion as at 10 February 2021.
Vendors Option to Settle The sale and purchase agreement to acquire 48 Grant Road, Queenstown allows the vendor the ability to choose a settlement date between 17 March 2021 and 20 December 2021. The vendor must provide their option to the Partnership, with settlement taking place 20 working days following receiving notice.
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Income Split by Tenant (NZ Couriers)
1+1+32201815
13
13%
Tekplas CDC Pharmaceuticals BP Downer New Zealand Couriers Tekplas Option Downer Build
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The Locations
Hobsonville, Auckland Hobsonville Pont is one of the fastest growing areas in Auckland City with large scale Residential and Commercial building development beginning in 2011 and scheduled to continue into 2024. The area juts out into the Waitemata Harbour and is a short 20-minute drive northwest of Auckland’s CBD. Once fully complete in 2024, this new Auckland community will be home to a total of 11,000 residents with 4,500 residential homes, several commercial restaurants, and bars and 26 hectares of parks and reserves. The well-established suburb of West Harbour is to the southwest with Greenhithe to the northeast, with both suburbs providing strong support to local businesses. The BP site is well positioned on State Highway 32, a main arterial traffic route in the area.
Rukuhia, Hamilton Hamilton is strategically located between the two main New Zealand ports of Auckland and Tauranga and is just over an hour from Auckland. It is the fourth largest city in New Zealand with a population of over 150,000. The Rukuhia area is home to Hamilton Airport and is an industrial growth area with tenant such as Visy Board and Torpedo 7 trading from this location. With further development and a new arterial road planned for the immediate area, this location will remain a popular industrial area.
Five Mile, Queenstown The Queenstown Lakes District region offers unparalleled lifestyle in a unique environment, captivating national and international visitors alike and is home to a growing permanent population. On any given day there is an average of 70,000 people including visitors, swelling to 120,000 at peak visitor times. The region benefits from growth in the resident population and growth in international and domestic visitors, driving visitor expenditure growth significantly higher than the national average. Five Mile is well positioned to capture this expected growth. Five Mile Centre is located on the corner of Grant Road and Frankton Ladies Mile Highway (State Highway 6), Frankton, circa eight kilometres by road north of Queenstown International Airport. The Five Mile Centre is in the centre of growth in Queenstown. Topographical constraints restrict the ability to extend or expand the CBD. Congestion, parking, and limited access are all significant challenges of a CBD location. Frankton is the fast growing alternative, fulfilling the need for accessible and dynamic places to shop, work and stay for locals and visitors alike. The immediate area of Frankton comprises primarily of commercial and service retail provided through the subject Centre, the adjoining Queenstown Central and Remarkables Park together with industrial development situated on Glenda Drive. Remarkables Primary School and Wakatipu High School is situated a short distance away from the complex. Queenstown International Airport is situated immediately to the south of the subject properties, providing the main tourism gateway to the Central Otago area.
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Mount Maunganui Mount Maunganui has experienced large growth in recent times with the increase in economic activity across the golden/growth triangle of Auckland, Hamilton, and Tauranga. Industrial property, Warehousing and bulk retail properties have become prominent due to the proximity to New Zealand busiest port and key roading and rail links. Port of Tauranga is the largest port in New Zealand by both total cargo volume and container throughput. This port is the only natural port between Auckland and Wellington which assists with strong economic activity in the region. Attracting locals are the limitless sporting and recreational pursuits, vibrant arts and cultural experiences, and high-quality retail & community facilities, all of which are complimented by the favourable climate. Mount Maunganui has one of the most popular beaches in New Zealand and is a highly rated tourist attraction. Tauranga also offers high quality education across all levels with a range of schools, a University of Waikato campus, and the Bay of Plenty Polytechnic.
Silverstream Business Park, Upper Hutt, Wellington Silverstream is a suburb of Upper Hutt, located just 7km south-west of the Upper Hutt central business district. Silverstream business park is a newly developed area with strong transport links and easy accessibility to State highway 2. The surrounding Upper Hutt area has experienced significant growth over the previous decade as the as the geographically constrained Wellington region grows. With large scale residential developments underway and plans to further develop residential land, the Upper Hutt community will benefit from population growth in the area which is leading to greater commercial activity in the area. The Silverstream business park has been specifically developed to cater for this commercial need with well-known tenants such as Fliways and Hirepool being located in the park alongside CDC Pharmaceuticals. Geographical constraints in and around the immediate Wellington city area have led to growth in commercial property in Upper Hutt due to its accessibility to major transport links.
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Investment Model Rental Income CAP rate
Purchase Price Acquisition Costs Downer Capital Works
$2,178,115 4.21%
$51,261,360 $1,948,640 $525,000
Total Cost
$53,735,000
Bank (48.84%)
$25,035,000
Equity
$28,700,000
Projected Cash Flow Year 1
Year 3
Year 5
Income
$2,178,115
$2,213,389
$2,261,891
Interest Rate Cost
$688,463
$688,463
$688,463
Management
$38,073
$49,370
$61,122
Accounting
$10,000
$10,404
$10,824
Maintenance
$4,500
$22,134
$23,028
Directors Insurance
$2,350
$2,421
$2,494
$743,386
$772,791
$785,931
$1,434,729
$1,440,598
$1,475,960
5.00%
5.02%
5.14%
Total Costs
Surplus
Pre-tax return
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Assumptions CPI
Management
Rate of 1.50% per annum
3.32% of net rent per annum. 1.75%
Net Income Based on initial net rent of $2,178,115 per annum in accordance with the
payable by the Partnership with the remaining 1.57% being met by three of the tenants.
signed Lease. There are a mixture of
Accounting
fixed annual rental increases, CPI rental
$10,000 per annum, increasing annually
increases and market rent reviews. CPI
with CPI inflation.
increases have been factored into the investment model per the leases and no increase has been assumed on market
Maintenance $4,500 provision in year 1 due to the
reviews.
properties still being under construction
Interest Rate Cost
net rent in years 3 and 5.
Average cost of funds estimated to be 2.75% for years 1 to 3. A mixture of floating and fixed rates are to be established upon establishment of the Board of Directors. Interest rates yet to be confirmed and subject to change. Interest rate on year 4 and 5 based on no interest rate change. Loan-to-value ratio Based on 48.84% lending of the contracted purchase price of $51,261,360.
warrantees, increasing to 1% of annual
Directors Insurance $2,350 per annum, increasing annually with CPI inflation. No Guarantee No guarantee can be given in respect of the projected annual return, strength of the tenants or the lending rates applied. Downer Capital Works Total cost calculated on a two-storey office building, estimated to be 150m² area based on $3,500/m² cost. Subject
Capital Growth
to change depending on total agreed
No capital growth has been factored
floor plate and cost.
into the projected pre-tax return.
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Risks & Considerations
There are several risks and considerations associated with all commercial property investments which are set out below. Mackersy Property always considers risks and has a number of acquisition and investment strategies to mitigate and reduce potential risks. These are listed in the right hand column below as “Mitigation Strategies”.
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Tenant
Risk
Mitigation Strategies
The Tenant is unable to pay rent or on expiry (or termination) of the lease the properties
Based on Mackersy Property’s tenant analysis, we are confident the likelihood of a
may not be immediately re-let or re-let on less favourable terms.
tenant default is minimal. 46% of the tenancy (by net rent) are listed on the NZX. The remain 54% of the tenancy are well performing businesses with a proven track record of success. The tenants are of high profile and have significant financial strength to ensure they can meet their obligations.
Repairs
Unforeseen major structural repair or capital expenditure may be incurred (excluding
Full replacement and reinstatement insurance is put in place to cover any damage
any structural repairs).
caused by insured risks and the tenants are responsible for all premiums and excesses in accordance with the leases. The tenants are responsible for all repairs and maintenance. A maintenance budget has been factored into the model of $21,932 per annum plus GST from Year 2 onwards.
Funding
Interest rates and the bank covenants are subject to change.
Advice is provided to the directors with an interest rate hedging strategy to mitigate this risk.
Increase in interest rates may impact the return to investors.
The investment model allows for a mixture of fixed and floating interest rates for the first three years which will be locked in from settlement.
Liquidity
If the Partnership is not meeting its bank covenants it may need to raise additional
To the extent that any investor provides further capital, this investment would ordinarily
capital to meet the banks’ amended covenants.
attract a return on the additional funds invested.
Investors’ investments may be locked in for an indefinite period of time if they are able
Mackersy Property manage the Unit sale process endeavouring to offer the best
to sell their Units or until the Properties are sold and the Partnership is wound up.
opportunity for finding a willing purchaser; initially Units are offered to all current Unit holders under the Partnership Agreement and to Mackersy Property’s private investment group.
At the time of selling Units, the Unit price in the Partnership may be more or less than
Any issue of further Units cannot occur without first offering the Units to existing Unit
the original price paid. Investors’ percentage interest in the Partnership may be diluted if
holders. Further capital invested would ordinarily attract a return on the additional funds
the Partnership issues further Units to raise capital.
invested.
No Guarantee No guarantees are given by Mackersy Property or any other person in respect of the Properties, the tenants or the return which investors may receive in relation to this investment.
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Non-Public Offer
The investment offer set out in this information memorandum is not intended to and does not constitute an offer to the public of a financial product. The investment is only open to the Mackersy Property pre-qualified investment group. To be eligible to invest you must be exempt under the provisions of the Financial Markets Conduct Act 2013. This information memorandum is not a registered prospectus or disclosure document and does not comply with the disclosure requirements of the Financial Markets Conduct Act 2013. This document does not contain the information that those documents would contain. This information memorandum has been prepared for general information purposes only and investors should carry out their own independent review, investigations, analysis and assessment of the information in this document.
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Disclaimer
At the time this Information Memorandum is presented Mackersy Property has completed its due diligence investigations and the information included in this document is based, to the best of our knowledge, on the information available to us at this time. Mackersy Property reserves the right to change any aspect of the proposed investment should that be in the best interests of the parties. Where Mackersy Property finds any information included in this document to be incorrect or any aspect needs changed prior to confirming the Agreement as unconditional, Mackersy Property will advise you of this and give you an opportunity to accept the updated situation before committing any funds to this investment on your behalf. No guarantee is provided by Mackersy Property regarding the number of Units that you will be allocated or the quantum of investment you can make in this opportunity or the actual returns that will be distributed to investors. The projections and indications given are made based on the information that is held at this time.
To register your interest in this investment, please email: invest@mackersyproperty.co.nz
To discuss this investment further, please contact: Mick Pannett
Marianne Coen
mpannett@mackersyproperty.co.nz
mcoen@mackersyproperty.co.nz
(+64) 22 477 8267
(+64) 3 450 9539
Omea Willows
Hamish Wilton
owillows@mackersyproperty.co.nz
hwilton@mackersyproperty.co.nz
(+64) 21 331 742
(+64) 27 594 8527
Adam Copland
Kate Mackersy
acopland@mackersyproperty.co.nz
kmackersy@mackersyproperty.co.nz
(+64) 27 944 0510
(+64) 27 535 3023
mackersyproperty.co.nz