Acquisition of large format retail development

Acquisition of large format retail development

Kiwi Property has today secured the acquisition of a large format retail centre currently under development at Westgate, in Auckland’s north-west, for $82.5 million.

Westgate is a comprehensively planned town centre development, located at the intersection of State Highway 16 and State Highway 18, which provides for new and existing retail, commercial, service and housing development.

The large format retail development, known as Zone 7, is anchored by Harvey Norman, Briscoes, Rebel Sport, Freedom Furniture and Hunter Furniture and comprises 28 retail units totalling approximately 25,500 sqm, with a central car parking area for 622 vehicles.

The development is 87% pre-committed with lease agreements in place for 22,200 sqm of retail space and a weighted average lease term of 8.1 years.

The centre is being developed by New Zealand Retail Property Group and sits on a predominantly freehold site of 5.1 hectares. A small portion of the land, 6.3% by area, is subject to a ground lease.

Chris Gudgeon, Chief Executive of Kiwi Property, said: “This acquisition follows our purchase in December last year of the former Apex Mega Centre at Sylvia Park - another high quality large format retail centre. The Westgate complex provides us with further exposure to large format retail space, which we see as an attractive sector in key locations.”

“The acquisition cost of $82.5 million represents a yield on passing rent of 7.0%, and we are targeting a 10-year internal rate of return of approximately 9.1%,” Mr Gudgeon said.

“This acquisition is consistent with our strategy of growing our Auckland retail sector exposure, specifically in dominant regional centres and large format retail locations favoured by the Proposed Auckland Unitary Plan. Westgate is a Metropolitan Centre under the Unitary Plan and we believe it will emerge as one of Auckland’s favoured retail destinations, particularly for large format retail, with very positive attributes in terms of population growth, household formation and motorway accessibility.”

The centre is currently under construction with the initial stages expected to commence trading in March 2016. The acquisition will be funded through existing debt facilities. Title for the land will be secured with an initial payment of $30 million, with the balance to be paid over the remaining development period.

ENDS

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