Giant Red Shed centre up for grabs

By Colin Taylor

The Warehouse's North Island distribution centre property covers 21.7ha in Wiri, South Auckland. Photo / Supplied
The Warehouse's North Island distribution centre property covers 21.7ha in Wiri, South Auckland. Photo / Supplied

The Warehouse is putting its distribution site at Wiri and three stores on the market for sale and leaseback.

The Warehouse has placed on the market for sale and leaseback its enormous, high-tech 21.7ha North Island distribution centre at Wiri, South Auckland, as well as retail stores in Snells Beach, Palmerston North and Queenstown.

Peter Herdson of Colliers International, who with colleagues Charles Cooper and Greg Goldfinch is marketing the Wiri property for sale by deadline private treaty, closing on July 26, says the distribution centre and retail outlets generate a total of about $8.5 million in net annual rental income.

"The properties offer investors a strong tenant covenant with one of New Zealand's largest publicly listed retailers," Herdson says.

Fiona Shilton, general manager property at The Warehouse, says the sale will allow the company to continue its strategy of reinvesting in its core retail business, while retaining the distribution centre and three retail stores on long-term leases.

The Wiri distribution centre is on two titles at 13 Bolderwood Place and 92 Langley Rd and returns $6.2 million in net annual rental income.

The Warehouse will take a new 20-year lease to the property on settlement, with the right to renew the initial term for three further terms of 10 years each. Potential income growth is also on offer through annual CPI-linked rent reviews, with market reviews at year 10 and on lease renewals.

The cavernous distribution centre is critical to the operation of The Warehouse's 89 stores, Shilton says.

"The facility is integral to our ability to grow revenue and satisfy our customers for many years into the future," she says.

Herdson says the property offers an ideal long-term, income-generating investment.

"The sale of the distribution centre offers a substantial and secure return which is future-proofed through the inclusion of rent reviews every year and a long lease to a stable, national-name tenant."

Two freehold titles - a main title of 19.3ha and a secondary title of 2.4ha - make up the property. Five hectares of development land are included within the larger title, providing further flexibility for the property's owners in the future.

Dual street access is provided along the property's substantial road frontage and the main trunk railway line runs directly alongside the northeastern boundary of both titles.

The main warehouse comprises 48,000sq m of floor area plus 11,500sq m of mezzanine area, with a stud height of 8.7m at the knee rising to 15.8m at the apex. The apparel warehouse has a floor area of 18,000sq m with a stud height of 10.4m at the knee rising to 12.3m at the apex. Both warehouses have extensive canopies for loading and unloading along with 34,000sq m of yard, used for container storage.

Offices and staff amenity areas including a training room and cafeteria are attached to both warehouses.

The main warehouse was built in 1996, with an extension in 1999. The apparel warehouse was built in 2004.

Together, the two buildings make up The Warehouse's largest distribution centre, which is the backbone of the company's nationwide operations, Shilton says.

"The centre distributes general merchandise to 57 stores and also deploys consumables and apparel to our 89 stores around New Zealand."

More than 200 permanent staff ensure the efficient handling of goods, with staff numbers doubling at peak times. The main distribution centre houses more than 2km of conveyor belt for handling goods, while more than 20 million garments pass through the apparel centre each year.

Goldfinch says the property is a very impressive facility and the buildings are in very good condition.

"Being of relatively recent construction they are very functional and would suit a wide variety of industrial uses should vacancies arise in the future.

"The operations within the distribution centre bring together technology, automation and manpower for efficient handling of goods on a large scale," he says.

Trucks and containers are unloaded in a large inward goods area, where about 30 containers a day are unloaded during off-peak times - rising to 60 per day at busy times. Most locally produced goods are dispatched on the same day they arrive, having been put straight on the conveyor for automated sorting and dispatch.

Pallets of goods are stored and monitored by computer, and goods are loaded on to the conveyor to be dispatched out to stores.

All conveyors merge at mezzanine level, where a scanner reads the labels and assigns each package to a store location.

Packages are then palletised, labelled and sent to designated holding bays for loading on to trucks. Up to 1100 pallets are sent out every day, equating to about 40 truck loads.

The property is strategically located within minutes of two motorways and is 10km from Auckland International Airport and 2.5km from the Wiri Inland Port.

"With continued growth and the proposed State Highway 20 Waterview extension providing an alternative link through to the North Shore and West Auckland, Wiri is an ideal location for many medium-to-large-scale businesses which require direct access to transport infrastructure," Goldfinch says.

"This is demonstrated by some of New Zealand's best-known brands basing their operations there, including Croxley, K-Mart, Bridgestone, Frucor, Progressive Enterprises, Downer EDI and Foodstuffs."

The limited supply of land in South Auckland should ensure that the value of high-quality, well-located industrial facilities is protected into the future, Goldfinch says.

"Land in Wiri also offers cost benefits over the more traditional industrial areas in South Auckland, where land prices are at a premium."

The scale of the underlying land parcel occupied by The Warehouse distribution centre underpins its value, with the site being larger than some of Auckland's most popular dedicated industrial business parks.

Further industrial development for Wiri is now underway, with Winstone having recently been granted consent for a private plan change to redevelop the former Wiri Quarry into an industrial park.

The property is zoned business 5, allowing for a wide range of activities including industry, motor vehicle sales and service and offices.

Like the Wiri distribution centre, the three retail stores in Snells Beach, Palmerston North and Queenstown are also offered for sale and will all be leased back to The Warehouse for a 10-year term with five further rights of renewal of three years each.

The 4776sq m Snells Beach Warehouse store sits on a 1.01ha site at 270 Mahurangi East Rd and is being offered for sale through Herdson and John Green.

Net annual rental income is $546,000 with regular rent reviews built in. The building has been recently modernised, including an exterior repaint and upgrades to the shop front windows, lobby and garden centre.

The Warehouse Palmerston North is a 9704sq m store on a 2.0ha site in the town centre, offered to the market via Green and Adrian van Dyk.

The property, which includes a garden centre, is at 174 Church St, and generates net annual rental income of $1,248,000, also with regular rent reviews. It has also recently undergone renovation, including an upgrade to the front store elevation, external painting and carpark and landscape maintenance.

The 3579sq m Queenstown store is for sale through Green and Mark Simpson. It is on an 8700sq m site at 12 Hawthorne Drive in the Remarkables Park shopping precinct, in the popular Frankton commercial area next to Queenstown International Airport.

The modern property generates $465,270 in net annual rental income, reviewed on a regular basis.

Cooper says The Warehouse makes an "ideal commercial tenant" for investors.

"It is well-established, large and has plans for further growth.

With 89 stores throughout New Zealand, the company remains a largely New Zealand-owned and operated listed entity, employing nearly 8000 team members from Kaitaia to Invercargill.

The Warehouse Group had adjusted net profit after tax and excluding unusual items of $76 million, on sales of $1.67 billion for the 52 weeks to July 31 last year.

- NZ Herald

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