Commercial Property Could Be The Answer To Inflationary Pressure

PMG Generation Fund is open for investment in prime commercial real estate offering an attractive forecast gross cash return of 5.26% p.a. paid monthly*

Savvy investors looking to protect capital against inflationary pressure could find the solution lies in ensuring some of their investment portfolio includes directly held commercial property, says PMG Chief Executive Officer and Director Scott McKenzie.

PMG Property Funds Management Limited (PMG) has opened its first investment opportunity of 2022 in one of its strongest performing funds, PMG Generation Fund, offering a diversified portfolio of industrial and large format retail properties. Funds raised by the offer, together with bank debt, will be used to acquire a high-profile large format retail property, in Hastings, partially tenanted by Farmers, one of the most established retailers in the country.

Assuming the successful completion of the offer, the Fund’s total portfolio value of all the properties is expected to exceed $200 million*.

Open to all New Zealanders, PMG is offering investors the opportunity to participate in PMG Generation Fund’s offer at $1.14 per unit*. It comes with an accessible minimum investment threshold of 1,000 units ($1,140) and parcels of 1,000 units thereafter, until 30 March 2022 (or earlier if the offer is fully subscribed).

“For investors with term deposits in the bank, their investments are essentially moving backwards when inflation is considered. On the flip side, rising inflation costs can mitigate any erosion of capital if invested in other asset classes like unlisted commercial property funds. PMG’s Generation Fund achieves this through rental growth, low vacancies, an interest rate risk management strategy, and taking a long-term view,” McKenzie explains.

As a Portfolio Investment Entity (PIE) PMG Generation Fund offers investors considerable taxation benefits with a capped tax rate of 28 per cent.

Additionally, McKenzie notes that New Zealand's commercial property sector's outlook remains strong, with real property assets historically performing well through inflationary periods because property often offers a safe harbour for capital preservation. Regardless of where property values go over time, the Fund continues to offer investors with potential cash income, paid monthly.

Since inception, PMG Generation Fund has performed well with a total annualised gross cash return, including unrealised capital growth, of 12.9 per cent** projected for original investors. In addition, investors have the choice of reinvesting the monthly income the Fund provides into PMG’s Reinvestment Plan, so they may enjoy the benefits of compounding returns.

The acquisition property will join five other industrial and large format retail properties in, Wellington, Hamilton and Christchurch along with Bethlehem Town Centre in Tauranga, with nationally recognised tenants including Coca-Cola Amatil, Rentokil, Torpedo7 Limited, Countdown, Kmart and BP.

“Farmers, the anchor tenant at the intended acquisition property, has a weighted average lease term of 10.3 years and is located in the heart of Hastings shopping centre which services the extensive Central Hawkes’ Bay farming community and neighbouring towns of Havelock North, Clive and Taradale. Furthermore, Hastings is currently experiencing a regional housing boom with over 8000 homes forecast to be built by 2030. These factors make this property an appealing prospect for our investors,” said McKenzie.

Denis McMahon, founding Director and Chairman of PMG, says a recent licence variation enables PMG Generation Fund to also invest in other PMG funds for the first time, as part of its strategy to achieve greater portfolio diversification and income resilience for investors.

“This has the potential to provide investors in the Fund, on a look through basis, exposure to an overall commercial property portfolio currently valued at over $800 million.”

Anyone looking to explore their investment options can use the returns calculator on the PMG website, on each fund page, to see what their returns could look like if they invest.

Those interested in the offer can download a Product Disclosure Statement free of charge by visiting www.pmgfunds.co.nz or by contacting PMG’s Investor Relationships Team on 0800 219 476.

The offer is expected to open from 2 March 2022. Applications to acquire units must be received no later than 5.00pm 30 March 2022 (or earlier if the offer is fully subscribed). This offer is not available to investors outside of New Zealand.

About PMG

PMG is one of New Zealand’s most established property funds managers. For nearly 30 years, PMG has been invested in delivering long-term sustainability and value for investors through proactive commercial property management and investment.

PMG’s purpose is to create value and security for people in property, including helping New Zealanders achieve financial freedom. It does this by offering a range of unlisted commercial property funds, which cater for the differing needs of investors and provide them with choice, diversification (spread of risk by having a number of properties) and regular income.

The funds PMG offers and manages on behalf of investors include PMG Generation Fund, a fund designed to make commercial property investment possible for all New Zealanders; Pacific Property Fund Limited, a fund which invests in geographically and category diverse properties; and funds which invest in category specific assets, including PMG Direct Office Fund, PMG Direct Childcare Fund, and PMG Capital Fund Limited.

PMG is licensed under the Financial Markets Conduct Act 2013 to manage Managed Investment Schemes (excluding managed funds), which invest in, or own, real property in New Zealand.

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