For the first time in three decades, a sizeable and fully-tenanted East Tamaki industrial property occupied by one of New Zealand’s best-loved family brands has come up for sale and leaseback.
Underpinned by a seven-year leaseback to The Baby Factory, 58 and 62 Stonedon Drive offers investors a sizeable 16,424sq m landholding with holding income and development potential in East Tamaki’s tightly-held industrial precinct.
The freehold property is marketed by exclusive agents Bruce Catley, Lewis Watson and Paul Steele of CBRE New Zealand by deadline private treaty closing on Tuesday 12 October unless sold prior.
“This is a fully-tenanted investment on a significant piece of prime freehold industrial land,” says Catley, CBRE’s managing director of industrial capital markets.
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“It is occupied by The Baby Factory, New Zealand’s most loved and trusted brand for babies and children, as well as well-known coatings business Polymer Group, which is deemed to be an essential service.
“The Baby Factory has been operating out of 58 Stonedon Drive since the early 1990s, and acquired the neighbouring property 62 Stonedon Drive in 2007. A sale and leaseback now will enable a new owner to come into the site and realise the substantial development upside that exists here once the leases expire in 2028.
“It really is a great medium-term development opportunity with market income. There hasn’t been a parcel of land of this nature on the market since the Steel & Tube site was sold a couple of years ago. It is one of the largest sale and leaseback opportunities to come to the market in East Tamaki over the last few years.”
Watson, associate director for industrial and logistics at CBRE NZ, adds that the property will most likely appeal to institutions, given the development upside on offer.
“The sheer size of this prime freehold landholding, plus its great passing income with 3 per cent fixed growth within the lease from a top-tier, triple net anchor tenant, offers huge development value upside. “Two initial scheme options have even been drafted for the front portion of the site to make the most of the desirable Light Industry zoning in this accessible and tightly-held East Tamaki location over the medium term.”
58 and 62 Stonedon Drive is a large, versatile 16,424sq m freehold landholding on two titles. Three standalone industrial buildings have been constructed on the site over various stages from 1994 to 2008. Today they offer a gross lettable area of 8145sq m.
58 Stonedon Drive includes a two-level office building with two adjoining sprinklered warehouse structures with stud heights ranging from 2.7-4.75m at the portal knee. 62 Stonedon Drive has a clear span warehouse, associated offices and a fully compliant dangerous goods area.
At the rear of the site, over both titles, is a large, modern warehouse constructed in two stages between 2002 and 2008. The column-interrupted warehouse spaces have a stud height of 6.2m at the portal knee, rising to 7.8m at the apex.
The two well-established tenants comprise The Baby Factory (NZ) Ltd and Polymer Group Ltd, providing an expected total annual rental of $1,199,266.
The Baby Factory provides $915,657 per annum, and Polymer Group contributes an annual $283,609.
Although the proposed leaseback to The Baby Factory is set to start upon settlement, with terms due to be confirmed, it is proposed that The Baby Factory will commence a seven-year triple net lease that will end in September 2028. Rent reviews are 3 per cent fixed annual growth.
The Baby Factory (NZ) Ltd was established in 1987 and is New Zealand’s leading childrenswear and nursery furniture specialist. A family business with over 34 years in the retail industry, it is privately owned and operated, says Paul Steele, CBRE NZ’s director of industrial and logistics.
“This well-diversified business has a strong spread of national retail stores, as well as an established and growing online presence. The Baby Factory brand is well known for great value, great design, high-quality products at affordable prices, along with exceptional customer service.
“Over 34 years it has generated significant goodwill, not only with customers, but suppliers, local and overseas, and other business partners.”
He adds that Polymer Group’s lease began on 28 September 2007 and is due to expire on 30 September 2023, with a single five-year right of renewal in place taking it out to September 2028. A market rent review is currently ongoing.
“Polymer Group was established in 2007 and is a highly reputed manufacturer and supplier of surface coatings, polyurethane foam and specialty products. Polymer Group is deemed to be an essential service, not affected by lockdowns like so many other businesses.
“The group has two core divisions: Surface Coatings, which comprises corrosion-resistant exterior coatings, architectural finishes, floor coatings, spray linings and fire protection systems. These products protect both concrete and steel surfaces in the oil and gas, petrochemical, water and waste water, pulp and paper, food and beverage, bridge and highway, power, and institutional markets.
“Polymer Group’s Polyurethane Foam division produces spray, injection and general purpose hand pour insulation foams, construction grade foams, molding, prop and theming products. These products provide thermal insulation, composite strength and high-quality moulded surface finishes in the oil and gas, pulp and paper, food and beverage, hospital and movie-making markets.”
Watson points out that 58 and 62 Stonedon Drive is a well-accessible site located minutes from SH1 and is only 10 minutes to Auckland CBD and port at off-peak times, while easily providing access to rail and inland port at Wiri in the south.
“This property is located in one of New Zealand’s premier industrial suburbs, offering great access to major roading infrastructure and other key commercial hubs in Auckland. It provides the perfect position for occupiers.
“Further, the site has a desirable Light Industry Zoning that permits a wide range of activities including manufacturing, production, logistics, storage, transport, and distribution.”
Watson adds that the development upside for the site has already been noted.
“Two indicative redevelopment concepts with varying warehouse sizes have been created to illustrate what may be accommodated on the site in future, subject to planning requirements.
“At a time of historically low industrial vacancy and huge interest in large well-located development sites, the potential of this property is underscored by these development concepts...
“At 58 and 62 Stonedon Drive we have a significant site with exceptional attributes: sheer size, a great sitting tenant, ready holding income, fixed growth within the lease, and huge development value upside. This truly is a stellar opportunity to acquire a significant land holding to generate real value into the future.”
— Article supplied by CBRE
