Four high-quality warehouse properties in Auckland, Hamilton, Wellington and Dunedin, leased to national retailer Home Direct, are for sale individually or as a complete package.
"All four properties have new leases and come with fixed rental growth," says Greg Goldfinch, national director of industrial sales and leasing at Colliers International, who with colleagues nationwide, is marketing the portfolio for sale by deadline private treaty closing on December 8 unless they sell before the deadline date.
Featured in the agency's final Colliers Portfolio magazine for 2016, the warehouse properties will all be leased back to Home Direct on settlement, Goldfinch says.
"This is an excellent opportunity to purchase a ready-made, geographically diversified investment portfolio, or to buy any of the four properties individually," he says.
1. The largest of the four properties at 2 Reg Savory Place, East Tamaki, which is generating an initial annual net rental of $510,000, increasing by 2.5 per cent each year. Home Direct will take an eight-year lease to the property with two further rights of renewal of four years each. The property contains two adjoining warehouse buildings: a medium-stud warehouse and office constructed in 1997 and a new high-stud warehouse built in 2012. They comprise "a very high standard of modern industrial space", says Andrew Hooper, Colliers' Auckland industrial director.
"The new warehouse provides a large clear-span space, with the high stud providing excellent cubic capacity for efficient racking. The warehouse is accessed via canopied roller doors and contains good quality offices and a large mezzanine storage area. Along with the older warehouse, this complex provides very functional and multi-purpose industrial space."
Hooper says the buildings provide a total gross lettable area of 3632sq m and occupy a freehold 7381sq m corner site within the popular East Tamaki industrial precinct, where vacancy rates are currently below 2 per cent.
"There is constantly high demand from tenants, owner occupiers and investors for industrial property in East Tamaki. It's a centrally-located area that is close to the motorway network, with excellent local amenities at Botany Town Centre and Highbrook."
2. The Hamilton property, at 19b Maui St, Te Rapa, is leased to Home Direct for a six-year term with two rights of renewal of four years each. The initial net rental is $80,000 a year, increasing by 2 per cent annually.
It comprises a modern, 630sq m industrial building constructed in 2009 on a 1156sq m site. Offices over two levels are positioned to the front of the site, with an adjoining clear span, high-stud warehouse to the rear accessed via roller doors.
The site also includes sealed car parking and manoeuvring areas.
An elevated view of the property at 2 Reg Savory Place, East Tamaki.
"It is a modern, versatile facility," says Alan Pracy, Colliers' Hamilton industrial director.
"The property presents well and is very functional, with excellent drive in/drive out access. The Te Rapa location is also a very strong selling point - this is Hamilton's premier industrial area and a location that is in demand among occupiers and buyers."
Surrounding the site are several good quality showroom and warehouse/office buildings, along with bulk retail stores and The Base shopping mall. The property is within 10-15 minutes' drive of the Hamilton CBD under normal traffic conditions, says Pracy.
3. The 1290sq m site at 2 Jepsen Grove, Upper Hutt, Wellington is leased to Home Direct and to a smaller tenant, Blackrock Trim and Upholstery, on a shorter-term lease.
The six-year lease to Home Direct lease will generate $58,796 in annual net rental, increasing by 2 per cent annually, and the company has the right to renew the initial term for a further six-year period.
Tim Julian, Colliers' Wellington industrial broker, says the 646sq m building provides a modern facility suitable for a wide range of uses.
"This is a functional warehouse on a corner site. It has a medium stud with great natural light and roller doors, and there are also offices and amenities over two levels, with concreted yards providing parking and vehicle access."
4. The fourth property occupying a516sq m freehold site at 9-11 Lorne St, South Dunedin, is leased to Home Direct and Titus Waterproofing. The Home Direct lease, with annual 2 per cent rental increases built in, will earn net annual rental income of $30,000 on a six-year lease, with a further six-year right of renewal. The Titus lease extends to March 2019, generating an additional income stream of $19,320 a year. Dean Collins, Colliers' Dunedin director, says the 388sq m building offers modern, purpose-built industrial accommodation, with a flexible configuration accommodating two separately-tenanted premises. "The building was constructed in 2003 and each tenancy has a separate medium-stud workshop, offices and amenities. It has been well maintained and the interiors provide well-appointed industrial space."
The property at 9-11 Lorne St, South Dunedin.
Goldfinch says tenant covenant offered by Home Direct, solid and growing income streams, along with the four good locations and construction quality, presents an attractive package for a wide range of investors.
"The opportunity to purchase all four as a mini-portfolio offering a good geographical spread from Auckland to Dunedin is a further plus for buyers," he says.
"With each property also offered individually, we're expecting interest from local buyers in each centre. All four sites display their own set of strong investment characteristics that will appeal to buyers looking to add quality industrial assets to their investment holdings."
"The whole portfolio and the Auckland site on its own are likely to suit syndicates, trusts and private investors - while the smaller regional properties are more accessible for smaller-scale investors owing to their more affordable price bracket if purchased individually."
Home Direct is a privately-owned Kiwi company that has been in business since 1973. It is known as a market leader in the direct selling industry employing over 250 staff selling online, by phone and via mobile shops.
The company offers close to 2000 products across clothing, nursery, manchester, audio visual, gaming, toys, furniture, personal care, health and beauty products, phones, household appliances,whiteware, recreation and outdoor products.
"Industrial properties with good fundamentals are as popular as ever among investors looking for uncomplicated, stable assets to add to their portfolios," Goldfinch says.
"The single over-riding characteristic of the industrial market is growth and expansion. This is positive for investors with a growing number of 'yield hungry' investors motivated by the low debt cost environment, providing another strong driver for the industrial sector's well-founded optimism."
