Tap into rural sector via Farm Source

10:02 AM Monday May 9, 2016 Colin Taylor

Eight well established rural supply stores, strategically positioned in key North Island provincial locations are up for auction early next month and are being promoted as offering passive investors the chance to gain low-risk exposure to the agricultural sector.

The Farm Source stores located in the Waikato, Hauraki Plains, Bay of Plenty, Taranaki and Horowhenua are being sold on behalf of RD1 Limited, a wholly owned subsidiary of Fonterra. All but one of the properties are for sale with initial eight-year leases to RD1 plus rights of renewal.

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The Morrinsville Farm Source store at 178 Thames Street. 

The properties are being marketed jointly by Bayleys and CBRE with Bayleys individually auctioning the properties which are featured in its latest Total Property portfolio.

Richard Graham, Bayleys Bay of Plenty, Waikato and Taranaki commercial manager, says the well maintained and newly branded properties are all located in provincial towns and are strategically positioned to service surrounding rural catchments.

Graham says the properties will not be sold prior to auction and they offer an exceptional opportunity to acquire high yielding, affordable investment properties with the security of new long-term leases to New Zealand’s largest agricultural group.

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The Farm Source store at 59 Orchard Rd, Ngatea

“With net rentals ranging from $38,783 to $172,459, they are in an accessible price bracket

for smaller investors and family trusts and are likely to provide higher income returns than properties with similarly long, strong leases in larger urban centres. Those returns will also be inflation proofed through two-yearly rental adjustments to the Consumer Price Index.”

Established in 2002 with the consolidation of the trading store networks of both the New Zealand Dairy Group and Kiwi Co-operative Dairies Limited, RD1 has an established track record of supplying and retailing to rural communities throughout New Zealand, says Jeremy Keating, CBRE’s director of agribusiness.

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The largest Farm Source store is at 104 Broadway, Matamata

“As part of a transformation initiative, RD1’s 71 stores are being progressively transitioned to trade as New Zealand Farm Source, with any remaining works on the properties for sale to be completed prior to settlement. 

“The aim is to establish rejuvenated Farm Source branches as ‘one stop’ farm services retailers selling animal feed, shed supplies, hardware, fencing, clothing, animal husbandry and stock management equipment, agri-chemicals, machinery, fertilisers, livestock and nutritional supplements. Staff will also provide advice and support to rural communities,” says Keating.

“With many of the stores in the nationwide network now trading as Farm Source outlets with long-term leases, the opportunity is being taken to free up capital to redeploy within the business – providing the chance for investors to secure well leased and located rural properties which otherwise would be very difficult to obtain.”

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The Farm Source store at 20 Kensington Street, Putaruru

Half of the properties are located in the Waikato and Hauraki Plains and will be auctioned in Bayleys’ Hamilton office at 96 Ulster Street at 2pm, on Thursday June 2. All offer new eight year leases to RD1 from the settlement date of July 2, with four three-year rights of renewal.

The largest store of 1052sq m is located at 104 Broadway, Matamata, and will produce net annual rental income of $172,459 plus GST.

Blair Hutcheson of Bayleys Waikato says the store is located on a substantial 2719sq m L-shaped site that has high exposure to Broadway (State Highway 24) and provides drive-through yard access and parking.

“The store is a big supporter of local school events, sponsors a local rugby team, the Matamata A&P show and participates in a range of fund raising events so it has a strong presence in the community.

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Richard Graham, Bayleys Bay of Plenty, Waikato and Taranaki commercial manager

“Commercial property tends to be tightly held in well proven rural locations like Matamata so this is a big opportunity to secure a high profile property in one of the country’s most prosperous provincial towns.”

In nearby Morrinsville, a similar sized Farm Source store of 1043sq m on a 2772sq m site at 178 Thames Street will generate net annual rental income of $152,024. Bayleys Waikato’s Josh Smith says the store has been located in the centre of town for over a decade and benefits from convenient dual street frontage and plenty of customer parking. Surrounding retailers include The Warehouse and a number of well-established local businesses.

“The area around Morrinsville is among the most intensively dairy-farmed regions in the world, hence the town’s 'Cream of the country' slogan and this is a chance to own an important part of heartland Waikato,” Smith says.

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Jeremy Keating of CBRE

Smith and Keating are also marketing a more recently established Farm Source store at 59 Orchard Rd, Ngatea on the Hauraki Plains. The 596sq m store together with 119sq m of canopies is located on a 4555sq m site and will generate net annual rental income of $124,750.

“Prominently located on State Highway 2, this store services the vast surrounding Hauraki Plains rural area”, Keating says.

“The primary sector continues to strengthen on the plains and a commercial section next door has been acquired, which is included in this sale, to enable the store to be expanded. The vendor is therefore looking for an investor willing to outlay additional capital up to a maximum of $600,000 to facilitate this over the next two years. There is an additional clause in this lease that covers those obligations as well as the commensurate increase in rental that will result. This is an opportunity therefore for a more active investor wanting to be part of the continuing growth of this region.”

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Mark Rendell, Bayleys Rotorua

In the South Waikato, a 1089sq m store on a 2313sq m site at 20 Kensington Street, Putaruru, is earning net annual rental income of $108,815.

Hutcheson says the property is conveniently located just off the town’s main roundabout and close to Bunnings Warehouse and State Highway One

“This store has been servicing the surrounding rural community for over 20 years, supplying on-farm advice and support as well as supplies,” he says.

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In the Bay of Plenty, a 479sq m store on close to 5000sq m of land in Horomanga Rd, Galatea, offers an opportunity for small investors to gain exposure to the rural property market with its new eight-year lease generating net annual rental income of $38,324.

It will be auctioned in Rotorua on Thursday June 2 at 1pm. “This longstanding store is the only rural supplies retailer servicing this important agricultural catchment, with nearest competitors in Whakatane, Rotorua and Taupo, and it has been a strong supporter of local schools and clubs,” says Mark Rendell, agent with Bayleys Rotorua.

Further south, two Taranaki Farm Source properties and one in Horowhenua will be auctioned in New Plymouth and Palmerston North on June 1 and June 2 respectively. They are:


  • A 1125sq m store, together with 145sq m of canopies located on a 3054sq m site at 62 Tasman St, Opunake, in the heart of Taranaki’s dairy belt. Located on the main street in the centre of town, with three street frontages including to State Highway 45, the property’s new eight year lease will provide initial annual rental income of $113,580.

  • A 400sq m small format store on a 1245sq m site at 68 Tauhuri St, in the Taranaki township of Manaia, which will generate net annual income of $38,815 from an initial three-year lease. It is located just off the town’s main roundabout which also connects with State Highway 45.

  • A 1294sq m art deco buildings, of which 806sq m is utilised, with a 105-year history of servicing the surrounding farming catchment on a 6552sq m site at 25 Stafford St, Shannon, Horowhenua. It comes with an eight-year lease from settlement producing net annual rental income of $79,970.


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