2017’s Largest Industrial Deal Signifies Ongoing Confidence in Industrial Property

The sale of a nationwide property portfolio to Property for Industry Ltd (PFI) this month illustrates the continuing demand for quality industrial assets among investors, according to the agent who brokered the deal.
Ben Dwan, industrial broker in Savills Christchurch office, negotiated the sale of nine buildings on behalf of TIL Properties Ltd and associated interests for $69.5m, representing a passing yield of 7.22%. The deal is thought to be the largest in the industrial property market in New Zealand this year.

The property portfolio has a weighted average lease term of 14 years, is 100% occupied and includes a significant amount of rentable yard areas that will provide opportunities for future development. Long term tenants including TIL Freighting, NZ Post, Aviagen and Contact Energy will continue to lease the properties.

“From an investment point of view this was a very attractive property portfolio, so we knew it would be highly sought after for large-scale investors,” Dwan says.

“It offered a good spread of locations from Auckland to Christchurch, with long leases in place. The large yard areas that will receive rent was also a big drawcard for PFI. This effectively future-proofs the properties, with space to expand current facilities or construct new and bigger buildings if needed.”

There is still plenty of appetite in the market for long term industrial holdings, with investors gaining confidence to expand their portfolios based on ongoing economic growth and high levels of business confidence in New Zealand, says Dwan.

“Industrial property has been a really popular investment sector for several years now, with lots of businesses doing really well and the macro environment expected to remain favourable for business growth.

“We’re seeing continued interest from across the buyer market, from individual buyers looking for smaller warehouses right through to institutional players buying entire property portfolios.”

The properties:

• 63 McLaughlins Rd, Wiri, Auckland: net lettable area 7,123sq m, site area 23,976sq m, site coverage 29.7%, tenant TIL Freighting 
• 39 Edmundson St, Napier: net lettable area 2,449sq m, site area 12,140sq m, site coverage 20.2%, tenant TIL Freighting 
• 330 Devon St East, New Plymouth: net lettable area 482sq m, site area 1,051sq m, site coverage 45.9%, tenant TIL Freighting 
• 2 Smart Rd, New Plymouth: net lettable area 2,342sq m, site area 6,121sq m, site coverage 38.3%, tenant NZ Post
• 20 Constance St, New Plymouth: net lettable area 1,432sq m, site area 3,312sq m, site coverage 43.2%, tenant Aviagen
• 28 Paraite Rd, New Plymouth: net lettable area 12,521sq m, site area 40,324sq m, site coverage 31.1%, tenant TIL Freighting
• 11 Sheffield St, Blenheim: net lettable area 4,823sq m, site area 20,724sq m, site coverage 23.3%, tenant TIL Freighting
• 15 Artillery Place, Nelson: net lettable area 2,907sq m, site area 22,343sq m, site coverage 13%, tenant TIL Freighting
• 41 & 55 Foremans Rd, Christchurch: net lettable area 4,584sq m, site area 24,907sq m, site coverage 18.4%, tenant TIL Freighting
• Total: net lettable area 38,663sq m, site area 154,898sq m, site coverage 25.0%.