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

 


Bell Gully: Uncertainty Ahead With New Unconscionable Conduct Legislation

new prohibition against ‘unconscionable conduct’ in trade is one of a number of changes to the Fair Trading Act 1986 that come into force from 16 August 2022. The new prohibition may have wide-ranging implications for many businesses... More>>


Statistics: Food Prices Increase 7.4 Percent Annually
Food prices were 7.4 percent higher in July 2022 compared with July 2021, Stats NZ said today... More>>



REINZ: Market Activity And Prices Continue To Ease, First Home Buyers Start To Return To The Market

New Zealand’s winter property market continues its recent trend, slowing from the pace of sales and price rises of last year — properties stay on the market longer and median prices dip... More>>



Kiwi Group Holdings: Fisher Funds Acquires Kiwi Wealth Business

Kiwi Group Holdings Limited (KGHL) today announced the sale of Kiwi Wealth to Fisher Funds for NZ$310 million... More>>



Retail NZ: Welcomes Return Of Cruise Ships

“Cruise visitors were big spenders in retail prior to COVID-19, and retailers in Auckland will be celebrating the arrival of P&O’s Pacific Explorer this morning... More>>



ASB: Full Year Results: Building Resilience Today And For Our Future

In its 175th year, ASB has reported a cash net profit after tax of $1,418 million for the 12 months to 30 June 2022, an increase of $122 million or 9% on the prior year... More>>