Investors shell out for Oyster Group property

Investors shell out for Oyster Group property syndications

The successful sell-down of two prominent Lower Hutt properties through a syndication ownership structure is testimony to the appeal of an investment option that offers attractive returns in an environment that has recently been clouded by finance company woes.

The interests in the syndicate High Holland Limited comprising two fully-leased properties - the recently-built Bunnings Warehouse in Naenae and Colonial House in High Street, Lower Hutt – were offered to the market by Bayleys Wellington. Each of the 118 shares was priced at $100,000 and presented to the market on behalf of Oyster Group.

Bayleys Wellington director Mark Hourigan said the syndicate was over-subscribed by seven applications - $700,000 - by the close date of May 4, following a targeted two-week campaign.

“We now have 73 successful investors - many with multiple shares - in this quality property syndicate. The fact that it sold out in such a short space of time reflects the demand for passive investment in well-managed high-end property at an affordable level,” Mr Hourigan said.

He said the combined $17.5 million value of the two buildings, coupled with the strong tenant profile across three tenancies, gave investors who otherwise couldn’t afford to be in the market for this quality of property the opportunity to get monthly returns unmatched by other current investment options.

“The management structure in place also ensures that the ongoing value and returns from the initial investment are protected and maximised.”

The High Holland syndicate has a projected initial cash return of 8.9 percent.

Bunnings Warehouse is fully-leased to Bunnings, while Colonial House has two tenants – Accident Compensation Corporation and the Ministry of Social Development. All tenants have more than eight years left to run on their leases.

Oyster Group managing director Mark Winter said the rapid sell-down of this offering was particularly heartening given the supposed recession recovery market New Zealand was in. He said the success of the offering reflected the quality of the properties, the calibre of the tenants, and the sound lease structure.

“When you can get those planets all aligned, then investors have confidence. Increasingly, people are after security from their hard-earned investment dollars and when the risk is spread across multiple properties and several tenants then the fundamentals really stack up,” he said.

Mr Winter said the high-specification Bunnings Warehouse building which was built in 2007 and the recently refurbished and retro-fitted Colonial House building are properties that wouldn’t generally get offered to the market in buoyant times.

“Good buying by Oyster Group and the application of sound management principles is the key to attractive proportionate interests being offered to the investment market which is increasingly looking for hands-off opportunities. With finance companies having lost ground in the consumer-confidence investment stakes, syndication ownership structures offer a way for investors to be in the commercial property sector in a no-fuss way.”

Bayleys Wellington has worked closely with Oyster Group over many years identifying suitable assets for the company to acquire for syndication.

“The last three share offerings we have taken to the market have been fully-subscribed – and in a tight timeframe. Oyster Group is an astute operator, very experienced in recognising robust opportunities, and their extensive portfolio is evidence of this,” said Mr Hourigan.

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