Increasing demand for commercial and industrial property syndications
/ Augusta News
New Zealand Herald
Syndicated property investments are attracting record-high numbers of investors seeking access to the commercial and industrial property market, says one of New Zealand's top real estate agents.
The type of property ownership commonly known as "syndication" is a relatively simple and accessible way for both new and experienced investors to take part in the ownership of institutional-grade properties, becoming investment partners in multi-million dollar assets with strong fundamentals such as location and tenant covenants.
Bayleys sales agent Mike Houlker, says syndications open the way for investors to buy into either individual assets, or funds with multiple properties. "Money from individual investors is pooled and the properties are managed on their behalf, with forecast returns distributed to investors at monthly intervals," says Houlker, who received the Real Estate Institute of New Zealand's awards for excellence commercial and industrial salesperson of the year.
"Many investors choose to buy into a range of properties in this way, potentially benefitting from diversification through assets in different locations, building types, and varied tenant profiles - all for a fraction of the up-front capital which would otherwise be required to achieve this through direct property investment.
"The low financial entry point for most offerings, typically starting at $10,000 to $50,000, draws a wide range of investors." He adds: "Bayleys are very particular about the type and quality of the syndicated properties we market. We are the sole selling agents for all of NZX-listed Augusta's syndications." Houlker says Augusta is one of New Zealand's largest property fund managers with around $1.8 billion in property under management.
Recent Augusta offerings available through Bayleys have included the new premium-grade, five green star office complexes in Auckland at 96 St Georges Bay Road in the city-fringe location of Parnell with Xero as the anchor tenant, and at 33 Broadway, in the suburb of Newmarket with Mercury as anchor tenant. Both investments offered a forecast pretax return of seven percent.
Mr Houlker said that in addition to single-asset syndications, investors were now also participating in investment funds where a portfolio of properties with similar attributes was at the core of the offering.
Last year, Augusta Industrial Fund Limited was established as an openended, unlisted property fund. Its purpose is to provide investors with the opportunity to invest in a portfolio of strategically selected assets all within the strongly performing industrial sector.
Initially consisting of four properties, the original $75 million share offer in 2018 was oversubscribed with many investors missing out. By early this year these original assets grew in value from $114.07 to $121.64 million and in March a further five assets purchased for $173.82 million were added to the portfolio through a $115 million equity raise which was again oversubscribed, highlighting continued strong investor interest.
The 47 tenants across three cities provided 99 percent occupancy at the time of the offer. These included global and multinational names such as Toll, Downer, Linfox, Fujitsu and Fletcher Steel along with well-known national tenants such as Macpac, Pacific Steel and Icepak (Hall's Group).