Oyster offer snapped up by investors

Oyster Group’s latest proportionate ownership opportunity of the Home Straight Business Park at 19 Te Rapa Road in Hamilton has closed early, over-subscribed, within a week of its release to the public. The $23 million commercial property offering drew substantial interest from new investors in particular and achieved the quickest public equity raise for Oyster in many years, according to chief executive officer, Mark Schiele. "40% of the total number of investors who participated in the offer, were new to Oyster. The Home Straight offer is the third syndication we’ve undertaken with a reduced minimum investment level of $50,000 - a shift which has definitively opened Oyster commercial property investment opportunities to a greater pool of investors," he says. The syndication scheme forecasted to provide investors with a pre-tax cash return of 8.4% a year, paid monthly, and required a minimum investment of $50,000 per interest. A total of 255 individual interests were made 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. It consists of two quality office buildings constructed in 2012 and is 100% leased to the Ministry of Education, RD1, City Fitness and The District Espresso & Eatery, a fully licensed 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. Mark Schiele believes the Home Straight offer had a number of attributes which had immediate appeal for investors. "There has always been strong investor demand for quality commercial property which has tenants of high repute and good length of leases. That, combined with the relatively new build of Home Straight and the projected pre-tax cash return, definitely satisfied investor criteria. "We’re obviously very pleased with the ‘record time’ equity raise which reinforces investors’ significant appetite for high quality commercial property. With historically low interest rates here for the medium term, investors want alternative options for income and commercial property returns are increasingly seen by many as an attractive complement to lower bank deposit rates." Schiele says the uptake from Auckland and Waikato investors was consistent with other offers, sitting at 40% and 20% respectively. The Home Straight Business Park property currently returns just over $1.7million in net annual income and occupies a total land area of 10,724m². Oyster will manage the property and the syndication scheme as part of its national portfolio of close to $800 million in commercial property assets.