New medical centre, industrial property added to fund

First Light Capital Limited has acquired two properties located at 18 Karewa Place, Te Rapa, and 57 Forge Road, Silverdale.

Karewa Place is a brand new purpose-built regional medical centre and is the latest real estate asset to be added to an established property fund specifically set up to purchase low-risk commercial real estate assets in the healthcare sector.

With construction completed in early August, this 1,841-square metre commercial healthcare premises sitting on a 3,289-square metre site in Te Rapa on the northern outskirts of Hamilton is 100 per cent leased and home to a range of independent healthcare providers operating in separate yet complimentary fields of the medical

recovery sector.

The property has been purchased by First Light Capital Limited to add to its First Light Healthcare Property Fund Limited investment vehicle which has a projected pre-tax cash return of four percent. The high-tech premises at 18 Karewa Place was purchased for $11 million, with the transaction settling on August 11.

The fund already includes two well-known and long-established healthcare properties:

-122 Remuera Road, Auckland – A 1,720 square metre state-of-the art medical facility housing 17 tenants,

- 42-50 Totara Avenue, New Lynn – a modern medical facility comprising a 1,515-square metre two-storey building accommodating eight occupiers.

First Light Capital director Toby Hunn said the latest acquisition of the Te Rapa property geographically diversified the fund’s investment base and reflected the company’s intention to operate an ‘open ended’ fund continuously raising capital as its asset base increased.

“The sizeable Karewa Place medical centre blends in well with surrounding ‘big box’ retail tenancies in the Te Rapa locale, which is considered to be Hamilton’s foremost industrial and retail hubs. In close proximity to the west of the property is a Countdown supermarket, Kmart, Placemakers, Harvey Norman and The Base Shopping centre, which incorporates a Mitre 10 MEGA Store. Meanwhile, to the immediate east of Karewa Place is the highly populated residential suburb of Pukete,” he added.

First Light Capital chief executive officer Shane Scott said: “The principal objective of the fund is to allow shareholders of the fund to collectively invest in New Zealand’s latest, high grade medical facilities via properties located in growth sectors of New Zealand in order to derive investment returns which are closely correlated to returns those investors would have derived had they invested themselves… but with the benefits of scale and portfolio diversification’.

The Hamilton purchase comes as First Light Capital Limited also settled on the purchase of another large commercial real estate asset under its sister First Light Property Fund Limited entity.

The significant 5,439-square metre industrial food-grade premises in Silverdale on Auckland’s northern boundary is home to the well-known pie-maker Dad’s Pies, and was purchased by First Light Property Fund Limited for $11.775million.

The plant consists of approximately 2,500-square metres of warehouse/manufacturing facilities, a 157-square metre café and retail outlet, and 157-square metres of offices.

The Silverdale premises was purpose built for Dad’s Pies in 2002 and expanded in 2006 as consumer demand for the brand’s tasty treats continued to grow. The transaction settling on August 23.

Dad’s Pies is on a lease running through to 2030 with three further five-year rights of renewal – generating current annual net rental of $631,769.56.

Hunn said the 57 Forge Road property acquisition would allow the fund to maintain its annual net pre-tax cash dividend of six percent per annum, with dividends paid monthly.

First Light Property Fund Limited is a portfolio investment entity (PIE) for tax purposes – meaning that investors benefit directly from the fund’s tax deductions and are taxed at their applicable tax rate capped at 28 percent.

“These funds are ‘open ended’ – meaning we will continually raise capital for additional investment in order to incrementally reduce investment risk across the portfolio both geographically and in asset class diversification. The intention is to seek out further properties to add to the portfolio in future,” Mr Scott said.

“Our strategy is to provide clients with the closest alternative to direct property ownership as possible. Shareholders also stand to benefit financially from any capital gain on properties within the trust."

- Article supplied by First Light