NZ’s richest man Graeme Hart votes with feet: Targets lucrative investment sectors

He’s voting with his feet: multi-billionaire Graeme Hart is clearly showing what he ranks as some of the most profitable sectors to invest in.

While Hart is New Zealand’s richest individual with assets of around $12 billion, you might think the sectors he invests in sound a little boring.

But they are highly profitable because they are not only embedded in tens of millions of American households but they are for what people need. They also offer long-term stable returns. Rank Group, which Hart owns, houses businesses that operate internationally in the packaging, consumer goods and building supplies industries.

Rank owns assets that deliver what we wrap stuff in, our need for food and shelter and where we store stuff.

Although he lives in Auckland, most of his investments are overseas.

However, his focus has returned to New Zealand in recent years, with investment in property, including in South Auckland’s warehouse/logistics projects.

And just last week he and his wife Robyn showed their philanthropic side with a $6.5 million donation to Starship children’s hospital.

Billionaire Graeme Hart's third new warehouse project, 68 Cryers Rd, East Tamaki, Auckland. Photo / Fernbrook Proprty

His Rank Group owns Fernbrook Property whose newest warehouse project is a 12,340sq m giant building at 68 Cryers Rd, East Tamaki, owned by Rank’s Fernbrook Property (CR).

That big project won’t be available to lease until the middle of 2025. Building A will be 12,340sq m of warehouses with 500sq m of offices and amenities, a shelter canopy of 2050sq m and 59 car parks. Building B will have a 9840sq m warehouse, the same area of offices and amenities, a 1620sq m canopy and the same number of car parks. Fernbrook Property has that project listed as CR1 and CR2.

The internal roof stud will be like the others: 16.5m inside, allowing for massive storage, all fully sprinklered, a high-spec floor and in what Fernbrook called the highly sought-after location.

Although the storage sector on Kiwi soil is a new swerve, Hart’s businesses span a wide sector range.

What's Hart up to overseas and here? Some action close to home is quite unusual as he forges into the industrial warehouse and logistics development sectors. Image / Rod Emmerson

Packaging

NYSE-listed Pactiv Evergreen Inc, making revenue of US$6.22 billion in 2022 and the global Graham Packaging, founded in 1970, headquartered in Pennsylvania.

Previously 100 per cent owned by Hart, Pactiv was floated in September 2020. The company specialises in packaging for food and beverage products in food serving, food merchandising and fresh beverage merchandising sectors. Through Rank Group, Hart has maintained a 78 per cent stake.

“Whether you grabbed a cup of coffee on your way into the office or enjoyed a home-cooked breakfast, the chances are that you’ve relied on packaging from Pactiv Evergreen today,” Pactiv says on its website.

Food manufacturing

Nasdaq-listed Reynolds Consumer Products with global headquarters in Illinois and Canadian headquarters in Ontario’s Mississauga near Toronto. The company makes goods for food preparation, cooking, tableware, cleanup, waste and storage and claims to have a “presence in 95 per cent of households across the United States”. For the full year to December, Reynolds posted net profit of US$258m, on revenue of US$3.82b - up 7 per cent on the previous year. Hart still has a controlling 74 per cent stake.

In 2018, Graeme Hart and his son Harry bought Hubbard Foods, before that Hansells Food Group. Last year, the Harts bought ice cream company Emerald Foods Group, returning it to Kiwi ownership;

Timber, trade sales

NZ’s Carter Holt Harvey Timber manufactures wood products, supplied from three plants and distributes nationally. The trade-focused retailer Carters sits under this umbrella. CHH Timber is one of our largest and oldest timber building products suppliers, with big Kawerau, Kinleith and Nelson mills producing brands like Laserframe and Pinex.

Auckland warehouse storage/logistics

Here’s where it gets close to home and there’s some action on these shores. His Rank Group’s Fernbrook Property has built two enormous Auckland warehouse projects, each twin-buildings, and just started on that third. These are new five-star green-rated south Auckland warehouses.

NZ Companies Office records show 24 new Hart businesses have been registered since 2019, giving a clear indication of the direction in which the billionaire is heading.

The three warehouse projects, each with twin buildings, are estimated by sector insiders to have an end value somewhere in the $300 million region once they’re all up and fully leased. Alistair White, managing director and founder of Auckland planning and resource management consultancy Planning Focus, has been involved in many Hart deals. White lists Rank as one of his clients but won’t talk about them.

The most successful warehouse project so far has gone to NZX-listed Synlait Milk which leased a huge new Wiri warehouse storage and office building from Hart’s company for its new southeast Asia plant-based export operation.

One of the two giant new warehouse structures with offices, 9 Jerry Green St, Wiri. Photo / supplied

A Synlait spokeswoman confirmed the company had leased adjoining warehouses and offices with on-site car parks at 9 Jerry Green St, Wiri. The property has 18,000sq m of storage space, 122 on-site car parks and ample truck turning space so containers can be packed and products hauled in and out of the huge buildings which have one vast open space within but are as tall as a five-level block.

Synlait won’t use the entire building right away. It has sublet “a significant portion” of the space it is renting, planning to grow into it over time, the spokeswoman said this month.

Fernbrook Property (JG), owned by Hart’s Rank Group, owns 9 Jerry Green St, property records show.

The second warehouse project is 90 Pavilion Dr, Māngere, on the edge of the Villa Maria Estate, itself about to become a $500m industrial office park by Goodman Property Trust. Two new buildings in a much sought-after location near Auckland Airport, built by Haydn & Rollett, with a Green Star 5 rating, with 36 car parks, fully sprinklered, a high-stud clear-span international warehouse space with high-spec floors and offices.

Billionaire Graeme Hart's third new warehouse project at 68 Cryers Rd, East Tamaki, Auckland. Photo / Fernbrook Proprty

The third project on Cryers Rd is still at the initial earthworks phase but like the other two sites, it is large, flat and with excellent transport connections, making it highly attractive to tenants.

NZX listed Goodman Property Trust is one of his biggest competitors when it comes to tenants. It tells investors of positive leasing dynamics and a highly constrained market which means tenants need to secure space early and many are committing to longer lease terms. Its weighted average lease term is an attractive 6.4 years, giving a stable income during the current economic uncertainty.

Why Hart probably loves industrial buildings in Auckland so much: rents are rising and vacancies are plummeting. Photo / Goodman Property Trust

Goodman is so confident about the sector that it has $635.7m of development work on, with big tenants like NZ Post and Mainfreight gobbling up leases on its buildings.

Rents are rising fast too: “Auckland industrial rents have recorded strong growth over the past year, with prime rents up 20.3 per cent and secondary rents up 15.6 per cent,” Goodman told investors when it released its interim result last year.

One chart in the result showed the perfect double-whammy of factors: rents rising from $100 in 2012 to $160/sq m by 2022 yet vacancy rates falling from around 5 per cent in the prime rankings to below 1 per cent by last year.

So, that’s why Hart’s companies are putting money into this highly lucrative sector.

It’s not Auckland Airport shares or Bitcoin, but it is a serious form of investment.