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Clever baskets expected to check out massive grocery property portfolio

Tuesday 31 May 2011, 8:50AM

By Bayleys

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New Plymouth Pak N Save
New Plymouth Pak N Save Credit: Bayleys
Miramar New World
Miramar New World Credit: Bayleys
Hastings New World
Hastings New World Credit: Bayleys

WELLINGTON

One of New Zealand’s biggest supermarket operating companies is selling off six high profile sites to fund a huge expansion programme.

Foodstuffs (Wellington) Co-operative Society Limited is a New Zealand-owned and operated co operative society - with members trading under such household grocery store names as Pak ‘n Save, New World, Shoprite, Write Price, and Four Square. Together, Foodstuffs (Wellington) Co-operative Society Limited outlets dominate grocery spend in the Lower North Island – with some 69 percent market share.

The company has placed six of its Lower North Island buildings on the international market for sale – with proceeds being used to build new sites in the region, and modernise other existing premises it owns. The six supermarket stores being taken to market are:

  • New World Miramar
  • New World Hastings
  • New World Greenmeadows
  • New World Waipukurau
  • New World Marton
  • Pak ‘n Save New Plymouth.


Foodstuffs (Wellington) Co-operative Society Limited’s property division general manager, Wayne O’Styke, said the company was totally committed to the long-term future of its brands – and all of the venues being offered for sale had 15-year lease terms in place, along with two 10 year right of renewals. Combined, the six sites generate a total annual rental revenue of $4.752million + GST.

“Currently we are upgrading New World Island Bay in Wellington, and are about to start on the expansion and upgrade of New World Carterton. Also underway are exciting plans for new supermarkets in the Wellington suburbs of Churton Park and Newlands,” Mr O’Styke said.

“Later this year we will be starting work on New World developments near the Basin Reserve on the fringe of the Wellington CBD, and also in Tawa - where we will be taking over and enlarging the property currently occupied by a Woolworths store and mall.

“The scope and size of these developments requires a considerable degree of funding, and to access that, the company has prudently chosen to realise capital from some of its property ownership.”
Bayleys Wellington director Mark Hourigan said all six of the sites being offered for sale dominated their local markets, and had all been built or fully refurbished within the past five years – making them ‘new’ in terms of commercial property. Their details are:

  • New World Miramar is a 3161square-metre building on 6338square metres of land, returning $698,636 a year in rent.
  • The massive New World Hastings is a 4956square-metre building on 1.2hectares of land, returning $870,000 a year in rent.
  • New World Greenmeadows in Napier is a 4423square-metre building on 1.3 hectares of land, returning 840,000 a year in rent.
  • New World Waipukurau is a 2679square-metre building on 6516square-metres of land, returning $420,000 a year in rent.
  • New World Marton is a 2108 square-metre building on 1.2hectares of land, returning $418,900 a year in rent.
  • The enormous Pak ‘n Save New Plymouth is a 8521square-metre building on 1hectare of land, returning $1.505million a year in rent.


Each of the six sites comes with substantial car parking facilities, with rent reviews scheduled every two-and-a-half years. The Hastings and Marton sites both include fuel outlets adjacent to the supermarket operations. The Foodstuffs portfolio is being marketed by Bayleys Wellington through an international tender closing on June 23.

Mr Hourigan said the quality of the buildings within the Foodstuffs portfolio, combined with secured long leaseback tenancies to a high-profile retail operator, made all of the sites very attractive for larger commercial property investors.
“This portfolio is certainly one of the biggest Bayleys has handled through this office in recent years, and is underpinned by Foodstuff’s robust growth strategy which will see its operational network strengthen in the Lower North Island,” Mr Hourigan said.

“There is the option to purchase one, several, or all of these properties. The sheer size and scale of the portfolio – either as individual sites or as one complete offering – necessitates that we take the properties to offshore buyer markets in conjunction with the New Zealand market, and we have already had expressions of interest coming out of Australia and South-East Asia.

“Retail grocery operations have become incredibly sophisticated over the past decade – implementing such fundamentals as marketing, logistics, the psychology of shoppers, and customer service.

“All six of these Foodstuffs sites are at the forefront of this retail evolution - which has ultimately seen them differentiate themselves from their local competition. This is a position parent company Foodstuffs (Wellington) Co-operative Society Limited is committed to maintaining with whoever the new property owners will be.”