Pacific Property portfolio adds two acquisitions

2:38 PM Monday July 25, 2016 Paul Charman

The three level commercial building at 6 Alderman Drive.

Pacific Property Diversified Investment Company has announced a new offer to raise $15 million to fund the purchase of Auckland commercial office properties, in Henderson and Mt Eden.

“The premium properties will double the value of the portfolio,” says Pacific Property director Denis McMahon.

An extension to the company’s Tui Products Limited premises in Truman Lane, in Tauranga, will also be undertaken by Pacific Property following the offer, says McMahon.

The two new substantial properties which will go into Pacific Property following this round of capital raising are located at 6 Alderman Drive, Henderson and 114 Dominion Road, Mt Eden, in Auckland. The offer to market is for up to 15 million ordinary shares to be issued at $1 a share.

Initial pre-offer indications indicate significant interest in the offer due to the forecasted returns and solid weighted average lease term (WALT) across the portfolio, says McMahon.

The Product Disclosure Statement (PDS) is available and the offer – available to existing and new investors – closes on August 24.

“The offer represents an excellent addition to the Pacific Property portfolio. It is in line with Pacific Property’s investment strategy to acquire well-located, income-producing properties leased to strong tenants on long leases,” McMahon points out.

Pacific Property directors, Denis McMahon and Philip Tushingham, are investors in Pacific Property which was established in 2013 and now has three properties worth $22.575M. This current offer will take the value of the properties owned by the company to about $46.175 million. The new properties will join 59 Druces Road, Wiri, Auckland, 307 Sandwich Road in Hamilton and Truman Lane in Mt Maunganui, Tauranga in the diversified property investment company.

An overview of the two new properties and Tui Products property is as follows:

6 Alderman Drive

The Alderman Drive property comprises a three-level commercial office building originally constructed circa 1986. The site occupies 4058sq m of freehold land zoned Community Periphery under the Waitakere City Council District Plan Operative 2003. The property is situated on the Northern side of Alderman Drive, a short distance east of its intersection with Great North Road and Henderson Valley Road. As a result, the property sits right in the Henderson commercial/retail core in Waitakere City. It provides a three level commercial office building with 3014sq m of net leasable space, refurbished throughout 2014 and 2015. 86 car parks are provided. The property has a A-plus seismic assessment of 147 per cent of the New Building Standard (NBS).

Property type: Commercial

Nett Lettable Area: 3167sq m

Purchase Price: $7.4m (31 August 2016)

Vendor: Alderman Investment Group

Current Valuation: $7.4m

Tenants: Ministry of Justice; Public Trust; Housing New Zealand; Grinding Gear Games; Endeavour Glass Packaging; NZ Family Planning; Jespersen & Associates; Waitakere Barristers Chambers

Occupancy: 93 per cent.

WALT (weighted average lease term): 3.3 years

Net Operating Income: $318,662 pa.

114 Dominion Rd

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The building at 114 Dominion Rd has ground floor retail with offices above. 

The Dominion Rd property occupies a business mixed-use zoned freehold corner site of 3700sq m within the central Auckland suburb of Mt Eden. It was constructed in 1988 and completely retro-fitted in 2009. It has a total net leasable space of 3600sq m. The building accommodates ground floor retail and office accommodation with two levels of office accommodation over and above in addition to a basement level. The large floor plates of 1000sq m to 1110sq m allow for flexible use of the space and the offices have floor-to-ceiling windows on all sides of the building providing plenty of natural light. Car parking is provided for 99 vehicles, mostly in a two-level parking structure. The property has a seismic assessment of 102 per cent of the NBS.

Property type: Commercial

Nett lettable sq m: 3605sq m

Purchase Price: $14.5m

Current Valuation: $14.5m

Tenants: Bank of Baroda; Connect NZ Ltd; Finance Now Ltd; Tuihana Cafe; EDEN Orthodontics.

Occupancy: 80.5 per cent. WALT: 3.6 years; Net Operating Income $480,869 pa.

Tui Products

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The Tui Products property is about 8km west of the Port of Tauranga and the Tauranga City centre.

The Tui Property is a purpose built industrial-building for Tui Products. It is a New Zealand-owned and operated company specialising in manufacturing, supply, and distribution of garden and seed based pet food products to outlets throughout New Zealand.

The industrial-zoned site comprises 3.54 hectares. The property is sited adjacent to a relatively small pocket of existing industrial developments just south-east of the intersection between State Highways 2 and 29, and about 8km west of the Port of Tauranga and the Tauranga City centre. The Tui Property has a seismic assessment of 100 per cent of NBS. The Company intends to build a new 1500sq m warehouse on the Tui Property.

Property type: Industrial

Nett Lettable Area (sq m): 9000sq m existing (10,500sq m proposed)

Purchase Price: $12,275,000 (2013)

Current Valuation: As is: $13.1m

After Tui Development: $14,750,000

Tenant: Tui Products Limited

Occupancy: 100 per cent

WALT: 17.60 years

Net Operating Income $920,743 pa.