A compelling opportunity for investors to enter a newly established Large Format Retail Fund is being offered by leading property and fund manager Oyster Property Group.
The Oyster Large Format Retail Fund has been created with the remit to invest in the strong performing large format retail property sector with the high-profile Albany Lifestyle Centre in Auckland strategically chosen as the fund’s initial asset.
The Oyster Large Format Retail Fund, which is being marketed by Oyster in conjunction with Colliers, provides investors the opportunity to purchase one or more of the 1,045 parcels on offer, with each parcel comprising 50,000 units for $50,000.
Investors are forecast to receive an annual pre-tax cash return of 5 per cent through to 31 March 2023, following the settlement of the initial property on 30 April 2021, with distributions payable monthly. Adding to the attractiveness for investors, the fund is a PIE structure and has potential to provide tax advantages due to the highest prescribed investor rate of 28%.
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Oyster’s Chief Executive, Mark Schiele is delighted to launch the Oyster Large Format Retail Fund that provides investors access to a significant initial asset in a pure play unlisted property fund which has the objective of growing, through further acquisitions, a stable and diversified portfolio of large format retail properties.
“The large format retail sector has established itself as a strong-performing commercial real estate asset class over the long-term, with total returns outperforming all other commercial property sectors in the last twelve months,” says Schiele, citing latest statistics from MSCI.
“With the current economic backdrop and the surge in consumer spending for DIY/hardware, furniture, homewares, recreational goods, electrical goods and supermarkets, the fund is commencing at a highly opportune time.
New Zealanders spent more than $11.7 billion in the large format retail sector in the December 2020 quarter, which was up 8% compared to the December 2019 quarter, according to Statistics New Zealand. This was higher than overall retail spending which was up 5.3% and set a new quarterly record.
“With such a strong set of fundamentals to support the fund’s pureplay large format retail focus, securing a high-profile asset like the Albany Lifestyle Centre to launch the fund is a major boon that is expected to generate strong interest from a variety of investors,” says Schiele.
Strategically located at 260 Oteha Valley Road in Auckland’s burgeoning suburb of Albany, Albany Lifestyle Centre is a high-profile 1.8-hectare site with three road frontages which provide easy access to State Highway 1. The property is expected to have a weighted average lease term of 7.69 years as at 30 April 2021 and provides a diversified tenant mix, anchored by Mitre 10, with a gross lettable area of 26,687sq m.
The property comprises a three-level large format retail centre with a mixture of 12 tenants.
Anchor tenant Mitre 10, which provides 40% of the property’s gross rental, is located on the ground floor which is accessed off Oteha Valley Road.
In addition, the property is leased to nine large format retail tenants including new leases to Freedom Furniture and Dankse Møbler, amongst other well-known household brands. The third floor provides office space which is fully leased to NZX Limited as well as EROAD Limited.
Rich Lyons, Capital Sourcing Manager at Oyster says, Oyster are well versed with this asset class and many of our investors have already invested in the large format retail sector and have comfort in the investment performance of this asset class as the properties are often significant land holdings that are catchment dominant, accessible to motorways, and are occupied by quality tenants with long lease terms.
“The Oyster Large Format Retail Fund will target further property investments that provide tenant and property diversification within the large format retail sector, a strong performing, resilient, asset class. The fund will have a particular focus on properties anchored by supermarkets, DIY/hardware and essential service stores with the key objective to deliver a stable monthly income to investors whilst providing the potential for long-term capital gain.
“Given bank deposit rates on offer remain extremely low, investors who are seeking income-generating investments will be hard-pressed to overlook this investment opportunity and the return on offer.” says Lyons.
Chris Dibble, National Director of Research and Communications at Colliers, says vacancy within Auckland’s large format retail sector at the end of 2020 was just 1% compared with 3% within shopping centres and strip retail vacancy of 8.5%
“Large format vacancy rates have moved within a tight band over an extended period, reflecting high levels of demand from occupiers and a limited turnover of tenancies.
Changing shopping habits and the growth of online retailing have had a significant impact upon secondary shopping locations and strip retail precincts, however large format retail premises, both standalone and centres, which offer a wide range of products and convenience, have retained high levels of consumer appeal.”
The offer is scheduled to officially launch next week and will close as soon as units are fully subscribed.
The fund will be managed by Oyster, which is one of New Zealand's leading commercial property fund managers. Oyster manages a range of retail, office and industrial assets throughout New Zealand, with a combined value in excess of $1.9 billion and currently manages over 20 property funds for retail and wholesale investors including the diversified Oyster Direct Property Fund.
No money is currently being sought and units in the fund cannot be applied for or acquired; but will be offered in accordance with the Financial Markets Conduct Act 2013. Investors interested in the Oyster Large Format Retail Fund can request a copy of a Product Disclosure Statement (once registered) from Oyster or Colliers without any obligation or commitment to acquire units).
