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PMG Completes 8 Commercial Property Acquisitions In 2020

Property funds manager PMG Property Funds Management Limited (PMG) has launched an Offer for the public to invest in PMG Direct Childcare Fund – a category-specific commercial property investment fund, offering a gross cash distribution return of 6.50%[1] per annum, paid monthly.

PMG Direct Childcare Fund is one of five unlisted commercial property funds managed by the 28-year-old manager. Since the Fund’s inception it has provided consistent monthly returns of 6.5% per annum to investors, while PMG’s other four funds have delivered between 5.5% and 7%[2] returns over the last six years.

PMG Chief Executive Officer Scott McKenzie says continuing to achieve these returns has been a direct result of PMG’s deliberate strategy to achieve income resilience through growing scale and diversification of properties and tenants in PMG managed funds over the last six years.

“This strategy, our conservative approach to debt, and experience over 28 years of multiple economic cycles has meant that not only could we support our tenants through March and April’s lockdown, but also continue to provide regular and reliable returns to our investors, which are higher in comparison to other asset classes such as cash, bonds and term deposits[3],” says McKenzie.

“With interests rates likely to be lower for longer, and talk of negative interest rates, we are receiving a huge amount of enquiry from investors, in our funds.

Despite the COVID-19 economic conditions, PMG has continued to grow resilience across its funds this year through strategic divestment, recycling of capital and the acquisition of quality commercial properties, geared to prevail through economic cycles.

Following the successful PMG Direct Childcare Fund Offer and acquisition of the three additional early childhood education centres, PMG will have overseen eight commercial property transactions valued at over $150 million this year across its five funds. The manager has also completed two successful capital raise offers in PMG Generation Fund, which was during the March lockdown, and the second in June for PMG Direct Office Fund, raising $37.76 million from investors.

“We believe this is the most commercial property transactions undertaken by an unlisted New Zealand property funds manager in the 2020 year to date, and we’re thrilled we have been able to continue delivering on our promises to those owners,” says McKenzie.

“As long-term investors in property, we do not try to pick the highs and lows of economic cycles. We look for the right properties, in the right locations, with the right tenants for the right prices always.

“This approach has stood us in good stead,” he says.

Funds raised during the current Offer in PMG Direct Childcare Fund, together with bank debt, will see the Fund acquire two premium childcare centres in Auckland and one premium centre in Gulf Harbour on the Hibiscus Coast, due to be completed in January 2021.

The centres in the Fund are leased to highly experienced childcare operators on long leases (averaging 14.2 years), in a stable Government-funded sector.

PMG is offering between 12 million units ($12.6 million) and 13.5 million units ($14,175,000) in PMG Direct Childcare Fund at an issue price of $1.05 per unit. Investors must make a minimum investment of 20,000 units and in additional increments of 10,000 units thereafter.

Following the successful Offer and acquisitions, the three centres will join six existing childcare properties, which include three recently built and fully operational centres, and two completed centres opening in September.

Upon successful completion of the Offer and acquisitions, the total value of the portfolio will be $45.66 million and own nine quality, early learning properties across New Zealand.

The Offer is open from Tuesday 29 September 2020. Applications to acquire units in the Fund must be received no later than 5.00pm on Thursday 29 October 2020. Those interested in this Offer can download a copy of the Product Disclosure Statement by visiting www.pmgfunds.co.nz.

[1] The projected annualised gross cash distribution return from 1 November 2020 is 6.825 cents per unit on a unit issue price of $1.05 per unit. The issue price is primarily based on independent valuations and is subject to change.

[2]Based on historical performance of the funds. Please refer to pmgfunds.co.nz for current metrics and more information. Prospective investors are recommended to seek professional advice from an Authorised Financial Advisor who takes into account their personal circumstances.

[3] https://www.interest.co.nz/saving/term-deposits-1-to-5-years as at 15 September 2020

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