Large format retail investment with scale

With consumer spending improving, tenant demand remaining strong, and forecast population growth supporting retail growth, Centuria NZ’s latest offer presents an attractive opportunity for investors looking to secure a foothold in the strong performing large format retail (LFR) property sector, with a minimum investment of $25,000.

Centuria NZ Large Format Retail No.1 (the Trust) has been established to acquire two substantial large format retail properties, namely the Southgate Shopping Centre in Takanini, Auckland, and Hornby Mega Centre in Hornby, Christchurch.

The two assets provide significant scale with a total valuation of $119.15 million and diversification of income across 42 tenants including major national brands such as Mitre 10 MEGA, Harvey Norman, Briscoes, Repco, and Bed Bath & Beyond.

Investors in the Trust are forecast to receive a 6.75 percent annual pre-tax cash distribution for the first two financial periods1, along with the potential for capital growth, with the five-year investment term2 providing investors with a defined investment horizon. Distributions are paid to investors monthly.

The LFR subset of retail property refers to stores with sizeable floorplates, often located in dedicated large format retail centres or along main roads, and tenanted by national chains such as hardware, supermarket, furniture, electronics, and homeware stores.

Southgate Shopping Centre has been managed by Centuria NZ for 10 years, delivering attractive returns and continuing to provide strong fundamentals. The substantial 4.5-hectare corner property has prominent exposure to Great South Road, Takanini, an area that has seen rapid population growth in recent years. The property is 100 percent occupied with 31 diverse tenant businesses, anchored by Mitre 10 MEGA and Briscoes who have been in occupation since the property was developed 20 years ago.

There are circa 592 car parks available for easy customer access, and the property is held in 27 separate titles, providing future flexibility and options for realising value.

Hornby Mega Centre spans nearly 2 hectares across four titles and serves the growing western Christchurch catchment. Positioned on Main South Road, a major Christchurch arterial, the centre has 257 car parks and is fully occupied – anchored by Harvey Norman among 11 tenants. Eight tenants have been onsite since the property’s 2012/2013 redevelopment, demonstrating continued demand and commitment to the centre. Approximately 80 percent of the centre’s income is subject to fixed or CPI rent reviews, ensuring future income growth.

Centuria NZ has significant large format retail experience and a strong track record. It is part of Centuria Capital Group, which has approximately A$20.6 billion of Trans-Tasman assets under management including commercial, industrial, office, retail, healthcare, agricultural and self-storage properties. Centuria is conservative in its approach with a focus on quality assets with strong long-term fundamentals.

Mark Francis, Centuria NZ chief executive says they consider large format retail properties to be well-positioned at this stage of the economic cycle and are demonstrating their confidence by taking a 5 percent ownership stake in the Trust on day one, via Centuria Platform Investments Pty Limited, the Centuria entity that is also fully underwriting the offer.

“Population growth and renewed investor confidence, supported by lower interest rates, are underpinning demand for well-located large format retail assets.

“The Trust’s acquisitions offer significant scale and diversification, with large land holdings in well-populated areas, enhancing their long-term strategic value”

Centuria NZ has appointed Bayleys Real Estate to market the investment offering. Bayleys head of funds and investment products, Mike Houlker says the commercial property market has seen strong returns over time.

“The New Zealand commercial property market has historically delivered strong long-term investment performance, underpinned by capital growth and reliable income returns with relatively low volatility. Over time, this has made the asset class an attractive option for investors.”

Samara Phillips, Bayleys funds and investment products manager says that along with the defined investment horizon, the PIE tax structure is an attractive feature for many investors.

“The maximum tax rate for your investment will be 28 percent and it will be less if your specific rate is lower. This is significantly lower than the highest personal and trustee tax rate of 39 percent, making this a tax effective investment for many investors.”

Centuria Funds Management (NZ) Limited is the issuer of the units in Centuria NZ Large Format Retail No.1. Application for units in the Trust can be made via a Product Disclosure Statement available from Bayleys or by visiting centuria.co.nz/LFR.

1. Details of how the forecast pre-tax cash distribution is calculated and the risks associated with this investment are set out in the Product Disclosure Statement. Cash distributions are not guaranteed. Actual distribution rates may vary.
2. There is a risk that investors do not receive back some or all of their investment at the end of the investment term and returns are not guaranteed. Details of the circumstances in which investors may agree to extend the investment term, the manner in which liquidity will be offered to investors at the end of the investment term and the risks associated with this investment are set out in the Product Disclosure Statement.

Centuria Funds Management (NZ) Limited is the issuer of the units in Centuria NZ Large Format Retail No.1. A Product Disclosure Statement for the offer of units is available, and can be obtained by contacting the Bayleys Real Estate agents listed in this advertisement. Nothing in this advertisement constitutes an invitation to subscribe for, or an offer of, units, shares, securities or other financial products to any person, in any country, in which it would be unlawful to do so. Terms used in this advertisement have the same meaning as defined in the Product Disclosure Statement, unless the context suggests otherwise. Prospective investors are recommended to seek professional advice from a financial advice provider which takes into account their personal circumstances before making an investment decision. The selling agents are not providing personalised advice. Important information about the financial advice service provided by Bayleys Real Estate Limited is available at www.bayleys.co.nz/funds