Plenty of fizz offered through property syndication with Coke

Investors are being offered the opportunity to own a slice of Coca Cola’s lower North Island distribution centre - with the syndication of the property through a proportionate ownership structure.

Shares of the title to the Palmerston North property - which has a long-term lease to the New Zealand authorised bottler of the multinational giant’s products - are being offered for an outlay of $50,000. The investment is projected to produce an initial return of nine percent per annum - which will be paid monthly to investors.

The syndication is being undertaken by Commercial Investment Properties Limited which will also manage the property on behalf of investors. The company has undertaken numerous property syndications - with a total value of approximately $160million. It currently manages 26 properties.

The Coca Cola property in Palmerston North’s East Terrace industrial area will be acquired for $6.5million. It has recently been valued by Manawatu valuation company Morgans Property Advisors at $6.6million.

A total of 78 proportionate $50,000 interests in the freehold title of the Palmerston North land and building are being offered under the proportionate ownership scheme with investors able to acquire one or more interests. Bayleys Real Estate has been appointed to market the scheme through sales consultants Reeve Barnett, Mike Houlker and David Gubb of Bayleys Auckland, and Lewis Townshend of Bayleys Manawatu.

Mike Houlker says property syndication was a method for smaller to medium sized investors to acquire an interest in a quality commercial and industrial property which would normally be beyond their reach.

“It provides an investment structure that allows investors to pool their capital to purchase large properties which produce higher income returns than smaller properties of similar quality,” he said. “The best property syndicates are ones that have a quality building in a good location with a strong tenant or tenants providing secure cash flows on a long-term lease. “

Coca-Cola Amatil (N.Z.) Limited has occupied the Palmerston North premises since its completion in 2003, and recently renewed its lease until November 2017 - with a further right of renewal of nine years. Its rental is reviewable to the Consumer Price Index (CPI) every two years, with the next review due in December 2011.

Mr Houlker says the CPI rent review structure was likely to provide built-in rental growth at a time when the outlook for market rental growth remained subdued. The rental will be reviewed to market at the end of the lease in 2017 should the tenant elect to exercise the right of renewal.

The Coca Cola distribution centre has a 4,992 sq m main warehouse with a 10 metre stud height at the apex plus 2,005 sq m of inwards goods and despatch warehousing. There are also 445 sq m of modern offices and amenities. The buildings sit on just under one hectare of land. Mr Houlker said the property benefited from extensive road frontage, with easy access for large trucks, and had the added bonus of a rail siding.

Other significant tenants in the East Terrace Estate industrial area include Woolworths and Foodstuffs - which both have distribution centres located there - Fletcher Easy Steel, Toyota, Turners & Growers and Kapiti Fine Foods.