Provincia Settles One Property, Acquires Another
Hot on the heels of its recent East Tamaki acquisition, Provincia Property Fund has just announced it has gone unconditional on another industrial property.
After completing the the purchase of its fifth property at 1/30 Kerwyn Ave, East Tamaki on 10 October 2019, Provincia Property Fund has announced it has just gone unconditional on a new property in Mt Wellington.
The purchase price of $7.1 million results in a 6.1% yield. Provincia asset manager Jack Revill said a registered valuation obtained during the due diligence period came in at $7.93 million, giving investors an immediate equity gain of $830,000.
Revill says the property is under rented and has significant upside. It is fully occupied and split risk across three tenancies.
The property is in three titles with access onto both Carbine Road and Gabador Place, Mt Wellington, total land area of 8,921 square metres and total Net Lettable Area of 5,124 square metres across the three sites.
All three properties carry a prized heavy industry zoning under the Auckland Unitary plan.
Surrounding development in the vicinity comprises a mix of older heavy industrial and newer office/warehouse development covering a wide variety of production and manufacturing uses.
Tip Top Ice Cream is located on the other side of Carbine Road from the property.
Another major landmark in the vicinity is Sylvia Park Shopping Centre, located a few hundred metres to the north west of the property.
In general, this is a well-regarded and established industrial location.
The new acquisition brings the total value of properties owned by the fund to $39 million with a combined rental income of $2.3 million, and spread risk over 16 tenancies.
Provincia's chairman Olly Newland announced a new capital raising in conjunction with the new acquisition. Newland says the fund has 83 share parcels of $50,000 available to investors. The capital raising closes on Wednesday 11 December 2019 and more details are available at https://www.newlandburling.co.nz/property-fund.
Provincia Property Fund (https://www.newlandburling.co.nz/property-fund) was established in November 2017 to provide the closest possible alternative to direct ownership in low-risk industrial property, whilst maintaining almost all the benefits of direct ownership.
Fund chairman Olly Newland says, "The aim is to make an expensive asset class very accessible to investors whilst avoiding the layers upon layers that often come between investors and the underlying assets."
"As a diversified, open-ended PIE fund, Provincia gives private investors access to attractive borrowing terms, professional management, better returns and a spread of risk over a greater number of properties, which becomes increasingly diversified as more properties are acquired."
Provincia targets a pre-tax cash dividend of 6% p.a. (on current share price) plus capital growth. Thanks to its value-add strategy, the fund provided foundation investors with a 39% total return in year one, comprised of 33% capital growth and 6% cash dividend.
The fund currently pays investors a quarterly dividend of 6% p.a. of the current share price, which in turn is determined by the value of the fund. Actual ROI (return on investment) depends on the share price at the time the investment was made. Foundation investors are currently earning 8% return on their original $1.00 per share investment.
Industrial property is generally regarded as the safest commercial property class, and the areas the properties are located in have some of the lowest vacancy rates in New Zealand, making it easier to attract new tenants in the future and further reducing risk.