Supermarket syndication checks out for savvy investors

The syndication of a Countdown Supermarket in the Fraser Cove Shopping Centre in Tauranga has met with a strong response from investors.

The offering of 183 individual proportionate title shares of $50,000 each in one of the largest Countdown’s in New Zealand has closed significantly oversubscribed.

Bayleys Real Estate sales consultant Mike Houlker, who managed the marketing of the investment on behalf of the offeror Augusta Funds Management Limited, said it attracted investors from all over New Zealand… from Northland to Otago as well as an expatriate based in Hong Kong.

“Unfortunately, we’ve also ended up with a lot of disappointed investors who we’ve had to return cheques to and we’ve continued to receive enquiry well after the offering has sold out,” Mr Houlker said.

“The market for this type of investment product – provided all the fundamentals of a quality building, good location and particularly a strong tenant covenant stack up – seems to be gathering even more momentum.

“Their main attraction is that they offer smaller investors a way to access better quality, higher yielding large commercial properties that would otherwise be beyond their reach.”

The Fraser Cove proportionate ownership scheme will provide investors who purchase a proportion of the registered freehold title in the property’s land and buildings with an initial projected annual income return of 9 percent per annum.

Augusta Funds Management is acquiring the supermarket for $15.58million from the developer of the Fraser Cove centre - New Zealand Retail Property Group (NZRPG).

There are two 15 year leases from March 2009 over the 5,112 sq m Countdown property to General Distributors Limited, a wholly owned subsidiary of Progressive Enterprises Limited.

Augusta managing director Mark Francis said one of the attractions of supermarket properties was that they offeedr the longest leases currently available in the market. Augusta Funds Management will manage the Countdown property on behalf of investors, while NZRPG will continue to manage the overall centre located in a high profile area of Tauranga between the central city and residential development to the south.