Land on which a Hamilton Countdown supermarket sits is being marketed for sale as offering investors a stable long-term income and the strong tenant covenant of one of New Zealand's largest retailers.
The property at 8 Eagle Way, Te Rapa, is leased for a 21-year perpetually renewable term to General Distributors, the operator of the nationwide Countdown supermarket chain.
"The lease generates annual rental income of $681,863 with the initial 21-year term expiring in October 2029," says Andrew Reed of Colliers International who is marketing the site with colleagues Mark Brunton and Cam Ward.
The site is for sale by deadline private treaty closing on October 10.
The property occupies a strategic 1.78ha corner position opposite The Base, New Zealand's largest shopping mall, which does not have a supermarket tenant.
The supermarket was purpose-built in 2008 for Countdown and is adjacent to another proposed retail development site.
"This is an excellent opportunity to acquire a high-quality asset occupied by an exceptional tenant on a long-term lease," Reed says.
General Distributors holds a sub-lease on the property, owns the improvements and is responsible for all maintenance. The buyer will acquire the freehold interest in the land as well as the head ground lease.
The long-term lease to one of New Zealand's largest companies makes the property a low-risk investment holding with the business making for an ideal commercial tenant. "Progressive Enterprises is well-established and has plans for further growth, as well as having the backing of a major publicly listed parent company," Reed says.
"General Distributors offers a very strong tenant covenant. Countdown is now the largest retail brand by turnover in New Zealand. Its owner, Progressive Enterprises, employs 18,000 people across various sites in New Zealand and, with Australian listed retail giant Woolworths as its parent company, is part of one of the largest private sector employers in Australia."
Reed believes the investment will appeal to private investors and family trusts in New Zealand and overseas looking to acquire long-term, non-cyclical retail property holdings.
Brunton believes the zero maintenance, passive nature of the investment will appeal to potential buyers.
"With an uncertain global economic climate prevailing, investors are looking for safety and cash flow. Investments like this offer attractive, stable, defensive characteristics and low default rates."
He says many property investors view supermarkets in good locations as ideal future-proof tenants offering strong income security.
"While discretionary retailers can suffer as consumers rein in their spending, supermarkets continue to thrive owing to their position in a necessity sector."
Brunton says the location is in a growing retail area where further development is planned. There is strong demand in the Te Rapa retail market.
"Retailers in this area serve a large catchment in the north of Hamilton, with The Base attracting 7.5 million customers annually.
"Very high traffic volumes and great road frontage profile on the main gateway to Hamilton from Auckland underpin this excellent opportunity."