Property For Industry owns big warehouses like this one in Manukau. Photo / PFI
Property For Industry owns big warehouses like this one in Manukau. Photo / PFI
Specialist listed industrial landlord Property For Industry announced today a $54.4 million deal to buy Auckland properties lapsed due to problems caused by Covid and the national lockdown.
The business, which has a market capitalisation of $1.4 billion, told the NZX this morning it would no longer go ahead withplans to buy properties on Tidal Rd, Māngere where huge new logistics centres were planned to be built.
That was even though a separate commercial developer, as well as a tenant, was lined up.
Last August, PFI said it had finalised an agreement to buy a Tidal Rd property for Aintree Group to develop a massive 10,210sq m warehouse, 2540sq m of breezeway canopies and 740sq m of offices.
Supply Chain Solutions, an Auckland logistics provider, would take a 12-year lease, PFI told the market late last year.
A subsequent December 17, 2019 announcement said it planned to buy a second Tidal Rd site, also for Aintree Group to develop. A further 7100sq m of warehouse, 1200sqm of canopies and 600sq m of offices. were planned.
The purchases of bare land from Aintree were subject to market conditions but PFI cancelled the deal.
"The agreements to acquire these properties were subject to market standard conditions, including sunset dates. Following delays caused by the Covid-19 pandemic and associated Government enforced lock-downs, these sunset dates have now been reached and the agreements have been cancelled," the business said.
Simon Woodhams, PFI chief executive, said today: "Our expectation was that it was going to be delivered by now and it was not. We have other things we have to get on with. There were delays in delivering the project. We were expecting the properties to be ready now to be tenanted. But titles have not been issued by Auckland Council."
Asked how long titles usually took, Woodhams said it was sometimes years.
Around 500 New Zealand building projects were hit by Covid this year, Building and Construction Minister Poto Williams was told recently.
In one of the many incoming ministerial briefing papers out this month, the Ministry of Business, Innovation and Employment told Williams of the toll the pandemic took on the sector.
"While it is still too early to precisely estimate the impact of the Covid-19 on the building and construction sector, research found that approximately 200 known construction projects were impacted by Covid at the start of April with this figure rising to near 500 known projects in August," the paper said.
The building and construction sector is New Zealand's fourth-largest employer.
Proximity to Northwestern Motorway cited in NZX announcement of $39m purchase. Photo / Google Maps
Today, PFI said it had contracted to buy an Avondale property where it will eventually have an 8.5ha site it says will be worth $110m once that deal settles.
It is buying a 2.8ha site at 670-680 Rosebank Rd where four existing buildings are leased to NZ Comfort Group and Dunlop Flooring.
The company already owned neighbouring properties on Rosebank Rd and Patiki Rd.
"When combined with these sites, an industrial estate of 8.6ha valued in excess of $110m will be created, just 250m from the Northwestern Motorway. This is a strategic acquisition that presents PFI with a longer-term opportunity to create value by integrating the property with the company's existing holdings," it told the stock exchange today.
The properties are fully leased for $1.7m annual rent, with a weighted average lease term of over four years.
PFI paid $39m, representing an initial return of 4.4 per cent. The estimated market yield is 4.9 per cent, and settlement of the acquisition will take place in next year's first quarter.
PFI has 84 properties leased to 147 tenants.
At its 2020 annual meeting, shareholders heard how 99,000sq m of space had been leased annually, $106m worth of properties had been bought and net profit was $176.3m
The business was founded in 1994 and the gross return since its inception was 11 per cent per annum, shareholders heard.
