St Laurence Launches Property Investment Product
October 19, 2001
St Laurence Launches New Property Investment Product
St Laurence Group, one of New Zealand’s largest property syndicators, is offering a new property investment product – a Proportionate Ownership Scheme.
Although proportionate ownership schemes are not new, this is the first time that St Laurence has used such a scheme as a vehicle to promote a property investment opportunity. The Scheme, which has been established in accordance with the Securities Act (Real Property Proportionate Ownership Schemes) Exemption Notice 1997, is being used by St Laurence to target more traditional property investors, in addition to St Laurence’s existing investor base.
The property, a bulk retail building of 4894m² in Mt Wellington, Auckland, is leased to The Warehouse on a 10-year lease. It offers investors many of the key characteristics sought in a quality property investment – a modern building in a prime location, with a long lease to a strong tenant, at or just below its market rent value.
The Scheme offers investors the opportunity to purchase an undivided share in the registered freehold title of the building. The freehold title will be held in a nominee company, Direct Property Investments (No1) Limited, established on behalf of investors. Ninety-two interests in the Scheme are being offered at $25,000 each, with investors able to buy one or more interests. Structured as an unincorporated joint venture between investors, the Scheme is established by the execution of an Ownership Deed by the Manager on behalf of investors. The $2.3 million subscription proceeds, together with $2.7 million of secured bank borrowings, will be used to acquire the property for $4.95 million, with fund establishment costs of $50,000.
The Offeror’s Statement fully reflects the requirements of the Securities Act and outlines in detail the structure of the Scheme. An attractive 10.1 per cent pre-tax cash return is forecast for investors. This forecast is calculated solely on the basis of cash distributions of profit and ignores any retained profit or loss that may result from trading or any increase or decrease in value of the property. Other key assumptions are that the tenant continues to pay the contract rent, that non-recoverable operating expenses are limited to a specified amount and that bank charges are fixed at a specified rate of 7.5 per cent.
Initial feedback from the market has been encouraging.
“The proportionate ownership scheme is new for us, but preliminary marketing suggests a strong appetite exists among investors to share in the benefits of direct property investment without some of the hands-on, day-to-day management responsibilities,” says Kevin Podmore, Managing Director of St Laurence Group. “Of course the current interest environment assists, but in essence we feel that we have created a product that will have strong appeal with both the experienced and inexperienced property investor. After all, there are not many opportunities available to invest in property of the calibre of The Warehouse, Mt Wellington from $25,000.”
The Offeror’s Statement is available directly from St Laurence and the offer closes on 30 November 2001.
For further information please contact:
St Laurence Group
Ph: (04) 913-1708, Mob: 025 732-264
L5, St Laurence House, 138 The Terrace, Wellington