Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

Stride sells three Bunnings stores to Investore for $78.5m

Stride sells three Bunnings stores to Investore for $78.5 mln

By Paul McBeth

Nov. 13 (BusinessDesk) - Stride Property Group has sold three Bunnings stores to Investore Property, the unit it carved out as a standalone property owner, for $78.5 million after renegotiating the terms of the leases.

Auckland-based Investore, which is still managed by Stride, will buy the three Bunnings stores in Rotorua, Hamilton and Palmerston North at an initial annual yield of 6.13 percent, with a 2.5 percent annual uplift fixed into future rent. That sale price is a premium to the $51.1 million value attached to the three properties in Stride's latest annual report, however, Stride has agreed to pay $18 million to Bunnings to terminate the old leases which included the option for Bunnings to buy the properties at the end of their term when they expired in June 2019. The new 12-year leases are at a combined annual net rental of $4.81 million, compared to the $4.67 million Stride received in the March 2017 year.

Stride has been keen to exit large format retail properties since carving out Investore last year, but couldn't agree to new lease terms with Bunnings in time for the initial public offering.

"These three leases were a legacy from prior to DNZ Property Fund Ltd listing on the NZX and this outcome is a significant strategic step for Stride to manage a key lease expiry risk and to solidify its investment holdings in standalone large format retail properties through Investore," Stride Investment Management chief executive Philip Littlewood said. "The assets and new lease terms are consistent with Investore's investment mandate and provide Investore with attractive portfolio diversification and earnings benefits."

Stride said the termination payment implies a net cost of $13 million after tax deductibility but isn't expected to materially affect distributable earnings for the 2018 year. It still owns one Bunnings store in Auckland, which will undergo work in the next 12 months, after which Stride expects to put the property up for sale. It valued the Auckland site at $36.9 million as at March 31, with annual rent of $2.22 million.

Investore shareholders will have to approve the deal at a special meeting, and if that's achieved, anticipates the deal will settle on Feb. 28. Independent directors Mike Allen and Kate Healy managed the sale and purchase agreement, and received independent valuations from Jones Lang Lasalle which supported the acquisition price. CBRE valued the Hamilton and Rotorua Bunnings stores for Stride's 2017 annual report, while Jones Lang Lasalle valued the Palmerston North and Auckland sites.

The acquisitions will lift Investore's loan-to-value ratio to 46 percent from 39 percent, and while that's below a maximum 48 percent LVR ratio, the property investor plans to sell up to three properties to give it headroom. The company's also looking at a potential share buyback scheme and the board is also considering a bond issue, it said.

Investore affirmed annual distribute earnings guidance to be 7.46 cents per share.

Stride shares rose 0.6 percent to $1.64 while Investore shares slipped 0.7 percent to $1.35.

(BusinessDesk)

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

Retail: International Websites To Pay GST

New rules would be aimed at imported goods valued at or below $1,000. Customs would retain responsibility for collecting GST on imported parcels valued more than $1,000. More>>

ALSO:

High-Level Advice: PM’s Business Advisory Council Membership Announced

The Prime Minister’s Business Advisory Council brings together a mix of experts, six women and seven men with small to large business experience, from across New Zealand, to provide advice. More>>

ALSO:

Improving: Report Shows New Zealand Air Quality 'Good'

Our air 2018, produced by the Ministry for the Environment and Stats NZ, shows that while some previously known issues persist, progress has been made and levels of some pollutants are declining. More>>

ALSO:

Greenpeace: Govt Extends OMV Exploration Permit

The Government has just granted oil giant OMV a two-year extension to drill in the Great South Basin, despite issuing a ban on new oil and gas exploration permits in April. More>>

ALSO:

Collective Bargaining For Contractors: Working Group's Model For Screen Sector

A recommended model to allow collective bargaining for contractors in the screen sector has today been unveiled by the Government-convened Film Industry Working Group. More>>

ALSO:

Kauri Dieback: DOC Closing Tracks To Protect Trees

The Department of Conservation will close 21 tracks across kauri land to help prevent the spread of kauri dieback. An additional 10 tracks will also be partially closed and the open sections upgraded... More>>