Once-in-a-generation Napier land portfolio for sale
Once-in-a-generation Napier land portfolio for sale
18 October 2014
Auckland, 18 October 2014 - A substantial and well-diversified portfolio of industrial and mixed use land offering significant growth potential in the commercial and industrial areas surrounding Napier Port has come up for sale.
Marketed on behalf of Corunna Bay Holdings Limited (CBHL) and Iron Pot Investments Limited (IPIL) by Bruce Catley and John Bedford of CBRE, the properties in the 365,000sqm portfolio are being offered together or separately via a Deadline Private Treaty campaign, with offers closing on Wednesday 12 November 2014.
Bruce Catley, Managing Director CBRE South Auckland, describes the portfolio as “a once-in-a-generation opportunity to buy the freehold interest in the land. The vendors have owned these assets in excess of 18 years and the sale process offers the current lessees the opportunity to buy the freehold interest in their properties as well as investors in the wider market who may be interested in purchasing them separately or as a portfolio.
“With a number of significant rent reviews due across the portfolio in the next 5-6 years, significant growth potential exists here for investors who understand the long-term secure nature of freehold land investment. Ground lease portfolios are known for their desirability and show excellent returns over time regardless of various property cycles. It will appeal to a wide range of investors looking for a passive income stream underpinned by freehold land in a region that is showing positive growth.”
The portfolio comprises approximately 37 hectares of industrial and mixed-use zoned land subject to 33 ground leases in the Onekawa, Ahuriri, Napier South and Pandora suburbs, which form the industrial and commercial areas surrounding the Napier Port.
The properties, which are all subject to ground leases that include a right for those lessees to occupy the land in perpetuity, have a mixture of 7 and 21 year rent reviews. The majority of the land is zoned under the recently released Napier District Plan as industrial or mixed-use with one site zoned fringe commercial.
John Bedford, CBRE’s Senior Director Metropolitan Investments, says that the portfolio is well diversified from a tenant covenant perspective.
“With an average 8.8 years to next review across the portfolio, significant growth potential exists. The well-balanced rental review profile and mix of reviews presents investors with the opportunity to actively manage rental levels across market cycles.”
The CBHL and IPIL ground lease portfolio is located within the Onekawa, Ahuriri and Pandora suburbs in Napier, Hawkes Bay.
Catley says that the Onekawa industrial area is the closest of Napier’s industrial areas to Hastings. “It has great access to the expressway and State Highway 2B. It is also close to the Napier CBD, Port of Napier and airport.
“Ahuriri offers an industrial and mixed use activity area adjacent to the marine activities, motels restaurants, residential and office and is closest to New Zealand’s primary north-eastern seaport. It has easy access to State Highway 2, the expressway, the airport and the Napier CBD. This high growth area is seeing other non-industrial activities such as the above activities which offer longer term redevelopment prospects for some of the land. Alternative use and more intensive activity could eventuate where the land was converted to freehold by the incumbent lessees.
“Pandora is another prime and established industrial area of Napier. Set in between the port and expressway to the airport, it has very good access via new roading systems to State Highway 2, which skirts the Pandora area. The infrastructure has supported recent redevelopments in the precinct for particular users who have recognised the advantages of the position between the port area and the expressway.
Catley adds that the Napier-Hastings urban area is the fifth-largest urban area in New Zealand by population, with 125,300 people and growing.
“Napier has seen good growth over the last year, with a 16% increase in Napier Port’s international export volumes handled over the year to March 2014 and an estimated 1.2% real GDP/economic growth rate recorded by the city over the 2013 calendar year. At the same time, total employment increased an estimated 1.5%.”
Directly adjacent to New Zealand’s main east coast international shipping lane, Napier Port’s influence has been growing over recent years, says Bedford.
"The port is now the North Island’s second largest export port by tonnage volume, and New Zealand’s fourth largest container terminal.
“Forestry products, processed fruit and vegetables, growing apple exports and increased dairy and meat exports have all contributed to record tonnages being handled through the port year-on-year. In addition, the port enjoyed a record cruise season with 69 cruise ships last year.”
By 2023, Napier Port’s container terminal is expected to handle in excess of 300,000 twenty-foot equivalent unit (TEUs) per annum. (The TEU is a unit of cargo capacity often used to describe the capacity of container ships and container.)
To service this growth, a $150 million investment programme is being undertaken by the port to fund plant replacement and infrastructure development over the next ten years. This includes dredging programmes to handle larger vessels, increasing export container storage berth-side, improving crane and vessel productivity, increasing rail capacity, upgrading the terminal operating system and commissioning two new cranes.
Additionally, in August Ports of Auckland announced that it is teaming up with Napier Port and Icepak to establish a new inland port and intermodal freight hub at Longburn, Palmerston North.
Bedford says: “With these plans in place, and the first half of the year seeing a boost in the Hawkes Bay economy, this portfolio opportunity could not come at a better time.
“Ground lessors interests are arguably one of the best forms of property investment available and we consider this to be a first-class investment opportunity.”
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (in terms of 2013 revenue). The company has approximately 44,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through approximately 350 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.