More Farmlands stores for sale as part of growth strategy

Media Release – Farmlands Trading Society Ltd

17 January 2011

More Farmlands stores for sale as part of growth strategy

Farmlands, the North Island’s largest rural co-operative retailer, is auctioning a further six of its retail stores on a sale and lease back basis as part of the company’s strategic growth.

The new stores, in Putaruru, Kaitaia, Paeroa, Taihape, Opunake and one existing at Waipapa in Northland, will be auctioned in April.
The move follows the hotly contested sale and lease back of seven Farmlands stores in late 2009.

Farmlands Chief Executive, Peter Ellis, says the sale of the stores will release capital for further investment as part of a long-term strategic plan in the development of the organisation.

“Over the last few years we have been investing in new branches and branch refurbishments. We have just opened our 42nd store and will open two new stores and refurbish a further four in the first half of this year. That will mean a total of 45 stores operating throughout the North Island, giving the company in excess of 25 per cent of the rural retail market.

“We’re unlocking the value of our real estate holdings to re-invest in the expansion of Farmlands as part of a growth strategy that will deliver an exciting future for the company, shareholders, and the wider rural community.”

Pat Turley of property advisors Turley & Co is leading the disposals project for Farmlands. Turley says the properties are expected to attract significant interest from investors, given the success and strength of the Farmlands brand, the quality of the assets, and the success of the 2009 property sales.

The November 2009 auction saw Farmlands lease back properties sold for between $1.5 and $2.4 million, realising $12.8 million at an average yield of 7.48 percent and as keen as 6.3 to 6.9 percent yield.

“New buildings leased long-term to high-calibre tenants like Farmlands are rare property investment opportunities, particularly in our smaller centres.

“These are great, ‘hands-off’ high-calibre building property investments with solid lease covenants that will be attractive to landlords.

“Investor demand for top-quality, well-leased commercial property remains strong. Given the current high levels of uncertainty in equity and financial markets, we anticipate a great deal of interest in the properties, which will be marketed to investors both in New Zealand and overseas.”

The six properties will be auctioned in Tauranga in early April with offer details available from about mid-February.

ENDS

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