Oyster Unveils Direct Property Fund

For Immediate Release

March 8 2016

Oyster Unveils Direct Property Fund

Oyster Group is set to launch a new unlisted property investment, the Oyster Direct Property Fund, to satisfy market demand for a property investment vehicle capable of providing monthly income from a portfolio of quality property assets throughout New Zealand.

The new fund will offer investors diversified exposure to $240 million in quality New Zealand commercial property. It aims to provide investors with a monthly tax advantaged income stream combined with the potential for capital growth, through investment in a well-diversified portfolio of significant commercial property assets.

Oyster CEO, Mark Schiele, says the fund will be a Portfolio Investment Entity (PIE) structure requiring a relatively affordable minimum investment of $10,000, with distributions payable monthly.

“The diversified fund will provide a new opportunity for investors to have exposure to quality commercial property spanning retail, office and industrial and to build their wealth by investing in a range of assets of significant value and scale. The fund will invest in a variety of assets which fit its criteria and investment mandate covering major urban locations, long lease terms and quality tenant covenants.

“To begin with, we will be seeking to raise a modest $15 million of investor equity. However the intention is to grow the fund progressively in order to allow investors continuous opportunities to invest.”

The fund will invest in existing Oyster commercial property syndicates and growth will be achieved by purchasing further interests within new schemes and through the fund purchasing its own direct property.

Schiele says the Oyster Direct Property Fund presents an ideal opportunity for investors to invest across all sectors of commercial property. Initially the fund will be invested in a variety of properties housing well established brands as tenant clients including Countdown, Mitre 10 MEGA, the New Zealand Racing Board, the Ministry of Education, Westpac, RD1, VIP Packaging and City Fitness.

The fund will be structured for monthly liquidity after its first year in operation.

“The Oyster Direct Property Fund offers investors an opportunity to diversify their commercial real estate portfolio by geography, property type and tenants. The affordable minimum investment of $10,000 also makes it an appealing investment option. With the official cash rate currently sitting at 2.5% and projected to remain at historically low levels for some time, we expect interest in the property fund, providing an attractive yield from a mix of assets, to be very high from both existing and new investors.”

Oyster Group will be able to disclose the exact composition of the fund, and projected monthly income returns, when its Product Disclosure Statement is released in April 2016.

Schiele believes there is strong investor appetite for different commercial property investment opportunities which offer long term gains in both income and value.

“Investors are seeking alternative options for income and they are aware commercial property is one sector that can provide relatively high income yields. Diversifying risk across a number of properties is something many of our investors have seen as desirable. Oyster has adapted and grown its suite of products to accommodate.”

He says this remains particularly important for new investors who may have a comparatively modest level of capital to invest.

“We continue to want participation in commercial property ownership to be achievable for as many investors as possible and, with a relatively low minimum entry level, we expect the Oyster Direct Property Fund to have wide appeal.”

Oyster’s public equity raises last year were seized by investors in record time. Its recent proportionate ownership opportunity of the $23 million Home Straight Business Park at Te Rapa Road in Hamilton closed, over-subscribed, within a week of its release to the public. It was Oyster’s third syndication with a reduced minimum investment level of $50,000.

The Group was also recently notified that it is one of the first in the commercial property industry to be granted a Managed Investment Scheme licence by the Financial Markets Authority. Schiele believes the requirement for all managers of investment products to be licenced is a major step up in the regulation of the financial markets.

“The hurdle to licencing is set high and this will weed out those operators who don’t have the skills, staff and robust processes required to be a licenced manager. This can only improve our financial markets and increase the quality of the managers which remain.”

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