Increased demand for premium industrial properties to generate passive off-farm income is occurring already as Fonterra shareholders seek to reinvest their upcoming financial windfall, but the assets are in short supply.
“Mum and dad investors with private capital to spend are continually on the lookout for hands-off income streams,” says Sam Staite, Director of Industrial at Colliers Christchurch.
“Add to that existing dynamic the prospect of $3.2 billion flowing into farmers’ pockets in the next month and the lack of quality opportunities becomes stark.
“We have already been fielding calls from farmers, bankers, and agri-advisors hunting for suitable investments. However, the New Zealand market is starved of premium long-term industrial investments so competition will be high when such properties reach the market.
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“Proven, longstanding tenants are a critical element on investors’ wish lists, and tenants who are associated with primary industry rate higher.”
For example, a state-of-the-art warehouse, production, and cool store facility in Upper Hutt is for sale – one where the quality of the asset and the strength of its tenant are fundamentals that attract serious investors from across the country.
The 2.1ha property at 30 Thomas Neal Crescent in Trentham is the lower North Island home base of one of New Zealand’s largest privately owned food service distribution businesses Service Foods.
This property is an example of an astute investment that stands on its own merits, says Staite, who is marketing it alongside Kieran Lennon, Associate Director of Industrial at Colliers Wellington.
Service Foods seeks to free up capital to fund further business acquisitions and new-city expansion, while locking in a new 15-year, triple-net lease over the premises it purpose-built and opened in late 2023.
“An asset like this – modern, custom-designed for efficiency, positioned in a highly sought location, with a strong national tenant and structured rental growth – is a compelling proposition,” Staite says.
Central to the appeal of this property is the calibre of the tenant. Service Foods has more than 800 staff, a fleet of over 220 trucks and 15 branches across the country.
The company is in growth mode and its Upper Hutt facility serves as the key distribution point for the Wellington region and as far north as Whanganui and Palmerston North.
Calder Stewart constructed the 7,147sq m facility designed to industry-leading specifications.
It includes conventional high stud dry goods warehousing, a glycol slab freezer and chilled storage areas, and is complemented by quality offices and amenities over two levels.
Lennon says the location itself is a genuine benefit.
“Trentham is tightly held – development options are scarce and available land even more so.
“Upper Hutt is a pivotal logistics hub for the wider region and this site was selected by Service Foods precisely because of how efficiently it serves the whole lower North Island distribution network.”
The lease structure adds further certainty for buyers. Fixed annual rent reviews between market review dates along with the triple-net arrangement for the initial term allows investors to forecast their long-term returns.
With Fonterra’s payout imminent, farming families looking to put that capital to work are likely to be attracted to this investment.
The Thomas Neal Crescent property is for sale by deadline private treaty closing at 4pm on 15 April, unless sold prior.
- Supplied by Colliers
