Oyster launches Hamilton syndication offer

New Zealand commercial fund and property manager, Oyster Group, has launched another major syndicated investment offering - the $23 million Home Straight Business Park at 19 Te Rapa Road in Hamilton located approximately 5kms north of the Hamilton CBD. Structured as a proportionate ownership scheme, it is forecast to provide investors with a pre-tax cash return of 8.4% a year, paid monthly, and requires a minimum investment of $50,000 per interest. There are 255 individual interests available. The property, (valued at $23,050,000), is located at the end of the Home Straight cul-de-sac extending from the eastern side of Te Rapa Road. Neighbouring businesses include a modern Bunnings Warehouse and a Mercedes Benz Dealership. Home Straight Business Park, consists of two quality office buildings constructed in 2012 and is 100% leased to the Crown (Ministry of Education), RD1, City Fitness and The District Espresso & Eatery, a fully licensed, strong performing food premise. Nearly 70% of the annual rental income is derived from the New Zealand government tenant and RD1, a wholly owned subsidiary of Fonterra Enterprises Ltd. The Ministry of Education and RD1 have 10 year and 8 year leases respectively, both of which commenced in 2012 and include further rights of renewal. Oyster CEO, Mark Schiele, says investor appetite for quality commercial property, such as Home Straight, is particularly strong in the current low interest rate environment. "We envisage this offer will be keenly sought by both existing and new investors. With interests at $50,000 each there is strong demand, and the projected pre-tax cash return is very attractive for this type of investment. "This is a high quality asset, with diversified income streams from strong tenants. We see Hamilton as a growth area and have always enjoyed strong investor support for property in the region," he says. Schiele says Oyster’s focus in recent times has been on making commercial property investment accessible for as many investors as possible. Home Straight is the company’s second public property syndication scheme this year, reflecting the company’s strategy to continue to offer a variety of products and offers which meet a range of investor requirements, from a relatively modest level of capital investment through to substantial, individual investment sums. Oyster’s two most recent private placement property syndicates - the Westpac building at 51 Corinthian Drive, Albany and Countdown Lincoln Road - were in high demand, being over-subscribed within days of the Information Memorandum being made available. These offers provide small investment groups the opportunity to purchase significant commercial property and typically have a minimum investment of $750,000. They are not publicly marketed but Schiele says qualifying investors are always made aware of upcoming opportunities. "Oyster’s commitment to providing a diverse range of offers has continued in recent months, with a view to creating a suite of property investment opportunities which appeal to current and potential investors. Our primary objective remains to enable as many investors as possible to invest in quality, commercial property. "With historically low interest rates seemingly here for the medium term, investors are seeking alternative options for income and we know commercial property returns are increasingly seen by many investors as an attractive complement to lower bank deposit rates." The inherent qualities of commercial property also act as a reliable store of wealth over the longer term, and Oyster has a strong track record of well-located assets which have historically proven robust through changing economic cycles. The Home Straight Business Park property currently returns just over $1.7million in net annual income. The majority of the leases include rental growth adjusted to the Consumer Price Index or 1-2% with a market review every two to three years. The Home Straight Business Park site occupies a total land area of 10,724m² and is relatively flat in contour. It is dominated by the two office buildings with carparking for 265 cars. Te Rapa Road forms part of the principal north/south highway in the North Island (SH1) and carries over 14,400 cars past the site daily. Oyster will manage the property and the syndication scheme as part of its national portfolio of close to $800 million in commercial property assets. Home Straight is being marketed directly by Oyster to its investor base and through Colliers International. The equity raise for the property opened a week ago and is already half full. To register interest or receive a copy of the Investment Statement contact james.molloy@oystergroup.co.nz