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Fruit cool-store and warehousing offers 'core' investment opportunity

Monday 11 April 2011, 10:46AM

By Bayleys

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Ripe for investment – the massive ENZAFoods fruit coolstore in Hastings
Ripe for investment – the massive ENZAFoods fruit coolstore in Hastings Credit: Bayleys

HASTINGS

One of the largest industrial warehousing complexes in Hastings is being offered for sale through proportionate ownership.

The massive ENZAFoods complex has 13,300 square metres of buildings sitting on more than seven hectares of industrial-zoned freehold land. Buildings on the site – located in a Hastings’ commercial and industrial hub - consist of cool-store facilities, freezers, packing houses, and significant yard areas.
ENZAFoods promotes a broad range of fruit and vegetable products – from juice concentrates through to sliced, diced and pureed pouch packs used by the catering, retail supermarket, and food ingredient manufacturing sectors.

ENZAFoods – formerly the New Zealand Apple and Pear Marketing Board – is part of the NZX-listed Turners & Growers Ltd group. In the year to December 2010, the company had turnover of approximately $40million and assets of $45million

The property is leased to ENZA for 13 years and eight months from January 2008, with a further nine-year right of renewal – taking the final potential expiry date through to 2030. Current net rental is $1.596million plus GST, and is subject to increases linked to the Consumer Price Index.

The property is being sold by its current owner, the McCombie Gieck Family Trust No.2, to syndicator Augusta Funds Management Ltd which currently manages some $260million worth of investment property throughout New Zealand.

Augusta managing director Mark Francis said the ENZA building would be purchased for $16.961million – funded by 40 percent bank debt, with the balance from investor equity. He said this reflected a conservative approach to gearing ratio.

“The vendor has agreed to subscribe for up to 220 interests if there is a shortfall at the close of the offer, although we do not expect this to be the case,” Mr Francis said.

“The lease agreement in place has been structured to provide investors with annual uplifts in returns – so that the projected 10.5 percent return in year one, will ramp up to a projected level of 11 percent by year three.”
Some 220 proportionate interests in the ENZA freehold land and buildings are being offered for public sale at $50,000 each - with the Offeror’s Statement from fund manager Augusta projecting an annual cash return of 10.5 per cent for investors.

The proportionate interests are being sold through leading real estate agency Bayleys. The project is being overseen by senior salesmen Mike Houlker and David Gubb.

“With the World Trade Organisation’s ruling in November last year that Australia must remove its ban on New Zealand apple exports, the future for New Zealand’s apple markets instantly grew from four million people to 24 million consumers,” Mr Houlker said.

“New Zealand trade analysts forecast that the lifting of the Australian ban could increase apple exports by $30million over the next two to three years – which is outstanding news for producers such as Turners & Growers – parent company of ENZAFoods. Supporting that export growth will be the infrastructure services delivered by the ENZA plant in Hastings.”

Mr Houlker said the proportionate ownership scheme had been established in accordance with the Securities Act – with the property independently valued in February this year. Applications for the ENZA unit title offering close on April 29 - with all subscriptions required to be made on an official application form.
The Hastings complex being offered for sale through the proportionate ownership scheme encompasses several separate buildings on the site. The buildings are named after well known Hawke’s Bay fruit producers.

The Ken Kiddle store was converted from an existing warehousing facility into a sub-zero coldstore facility in 2010 and comprises a coldstore of 2947 square metres with a canopy of 1001 square metres, an attached plant room of 175 square metres and a coolroom of 182 square metres.

The building has undergone extensive reconstruction in 2010, with $4.2million being spent on a number of improvements - including new flooring and internal linings. The foundations are reinforced concrete. ENZA announced the expansion would underpin additional processing capacity in its Hawke’s Bay hub.
Meanwhile, the Allan Scott Store is a five room facility consisting of 5204 square metres of coolstore, a canopy of 2917 square metres, an attached plant room of 183 square metres, with additional cafeteria and office space.

Bayleys has completed the sell down of a substantial number of property syndications in New Zealand in recent times, including Repco’s head office in Auckland, the Countdown supermarket in Tauranga and Auckland, Coca Cola Amatil’s Lower North Island distribution warehouse in Palmerston North, and Bunnings hardware mega-centre in Whangarei.