Tauranga-based Property Managers Ltd (PML) executive director Denis McMahon and fellow core investors are launching a new unlisted fund that will focus on commercial property in the Bay of Plenty.
Pacific Property Fund (PPF) is targeting retail investors with an initial public offering of $7.8 million, which will primarily helpfund the acquisition of Tui Products' new warehouse and office facility in Truman Lane, Mount Maunganui. The offer opens on October 29 and closes on December 18.
Mr McMahon, PPF's chairman, Philip Tushingham, a PPF director, and PML CEO Scott Mckenzie will co-invest $320,000 into the fund, which will be managed by PML.
"We like to have skin in the game and have always co-invested, but I don't think we will be the biggest shareholders," said Mr McMahon. "This will be a retail offering and we have our own significant client base. We know that there will be clients coming in that will invest significantly more than that."
James Beale, Craigs Investment Partners' head of investment management, who is a property specialist, said his firm preferred listed property vehicles that offered liquidity to investors via a freely tradeable market.
"We tend to use listed investment property trusts which have significant scale, and good diversification with a number of different locations and number of different tenants," Mr Beale said.
Mr McMahon said that PPF planned to register on www.sharemart.co.nz, which would provide an element of liquidity. Sharemart is used by other unlisted funds and companies, including Direct Property Fund and Waikato Property Investments.
"But where we are coming from, we sell the message that any investment in property should be regarded as long term."
Mr McMahon said that PPF aimed to build a diversified portfolio of properties primarily located in the Bay of Plenty, Auckland and Waikato, and would focus on properties from $5 million to $30 million, where the fund believed better opportunities existed to purchase on attractive terms. Fund manager PML, founded in 1992, has $120 million of commercial property under management, and was very experienced, he said.
Garden products company Tui will lease the Mount Maunganui site for 20 years, with two 10-year rights of renewal. The new facility will provide Tui with approximately 10,100sq m of accommodation situated at the front of the site, with approximately 4000sq m of land to the rear of the site remaining available for future expansion. The development is currently being constructed and is due for completion by March 28 next year.
Mr Tushingham said the property would have a starting net rental of $1 million.
"Long term, PPF aims to maintain a conservative gearing level which will assist with further acquisitions in line with the company's strategic growth objectives," he said.
