Big Auckland Industrial Complex Accessible To All Investors
Augusta Funds Management has launched its largest ever single asset property investment opportunity encompassing a huge industrial complex in Penrose, Auckland.
Investors are being offered the opportunity to purchase shares in Augusta Penrose Limited, a company to be established to acquire and own a 67,655 sq m manufacturing and distribution plant on an 8.576ha site at 752 Great South Rd. The property has a 20-year lease to Visy Glass Operations (NZ), part of the Visy Group, a large paper, packaging and recycling company with 5,000 employees and more than 120 sites throughout Australasia.
The offering is being marketed by Bayleys’ Syndication & Investment Products team of Mike Houlker, Samara Phillips, Sarah Prebble and Shirley Leung, with a minimum investment of $50,000 of shares.
Houlker says the offer provides all levels of investors with access to an institutional grade industrial property which is difficult to find in the current market. He says there are multiple aspects of the Vizy Glass property which will appeal to investors.
“Firstly, there is a very long new lease of 20 years which commences on 25 February 2021, plus five 10-year rights of renewal. Another major benefit to investors is rent reviews fixed at three per cent per annum, providing built-in rental growth annually for the next 20 years. This equates to a 75 per cent increase in rental income over the initial term of the lease.
“Also, it is a ‘triple net lease’ which is widely considered the most landlord-friendly form of lease. It means Augusta Penrose, as the landlord, is insulated from all liability in relation to the property other than damage or destruction, for which Augusta Penrose is insured. For example, any costs of capital expenditure, repair, maintenance and other works are not Augusta Penrose’s responsibility.
“Arguably, the most compelling aspect of the offering is the massive 85,760 sq m
underlying land holding in a prime position between the Southern Motorway and main arterial Great South Rd. The site is in the heart of one of Auckland’s most sought-after industrial suburbs and has a Heavy Industry zoning,” Houlker says.
“Centrally located land with this zoning is becoming increasingly scarce in Auckland. This combination of size, location and zoning is rarely available which bodes well for the property’s underlying land value and redevelopment potential in the long term.”
In July this year, the Visy Group acquired the Australasian operations of the world’s largest glass bottle manufacturer, Owen Illinois, creating the Visy Group’s glass business which operates from the Penrose site as well as locations in Brisbane, Sydney, Melbourne and Adelaide.
Samara Phillips says the tenant is New Zealand’s only large-scale glass bottle and jar manufacturer and under previous names has operated from 752 Great South Rd since 1922. “Their scale of operation is immense with around two million bottles produced at the site each day, using high volumes of recycled glass”.
Augusta Penrose is forecast to provide investors with an initial pre-tax cash distribution of five per cent per annum, paid monthly. Phillips says with the fixed annual rental increases and the tenant’s responsibility for all repairs, maintenance and capital expenditure, the forecast pre-tax cash distribution is projected to increase by 25 basis points in the second and third financial periods to reach 5.5 per cent in the year ending March 31, 2024, subject to the risks and assumptions contained in the Product Disclosure Statement.
The offer will be fully underwritten by Centuria Capital, an ASX listed specialist property investment management company with approximately A$10 billion in assets under management.
Centuria took over full ownership of the previously NZX-listed Augusta Capital last August. Augusta managing director Mark Francis described the NZ$178.3 purchase of the Visy Glass industrial property as a good example of the type of transformative transaction Augusta can contemplate with the support of the Centuria balance sheet.
Francis says Augusta Funds Management, which has approximately NZ$1.86 billion of assets under management, is conservative in its approach to shared property ownership structures with a focus on quality assets with strong long-term fundamentals. “At the core of our investment philosophy is providing sustainable monthly cash distributions and protecting and growing investors’ equity. The attributes of the Visy Glass property strongly align with this approach.”
Seminars will be held around the country in late January and early February outlining the offering. There will also be an online webinar presentation on January 28, 2021.
For a copy of the Product Disclosure Statement visit www.augustainvestments.co.nz.