Chance to pump up your portfolio

The Kordel Place facility in East Tamaki has allowed Vitaco to bring its Healtheries and Nutralife operations under one roof. Photo / Supplied

Vitaco's production, distribution and administration facility at 4 Kordel Place in East Tamaki is being marketed for sale jointly by Colliers International and Bayleys Real Estate.

Vitaco Health New Zealand Limited is the company behind the well known Healtheries, Nutralife, Balance and Kordel brands. The company's majority shareholder is Australian private equity company Next Capital, which also owns Hirepool in New Zealand.

Vitaco Health produces a portfolio of products that covers a variety of health and lifestyle lines ranging from dietary supplements and healthfood to sports nutrition, ti-tree oil and snacks.

The property is occupied under an 18-year lease to Vitaco which provides rental growth through three-yearly rent reviews linked to CPI.

Described as a prime investment opportunity by Andrew Hooper of Colliers, the property is being sold by a family trust under deadline private treaty with offers closing on March 24.

The Vitaco building occupies a high-profile 1.57ha site on the corner of Accent Drive and Kordel Place, which is named after the company's market-leading Kordel brand.

Developed in two stages, the buildings provide 12,694sq m of lettable space over three floors, including a state of the art production and distribution facility for Vitaco. The first part of the facility was completed in 2000. In 2009 a 15.5m stud warehouse, laboratory, offices and carparking building were added.

"This would have to be one of the most technologically advanced facilities of its sort in New Zealand," says Dave Stanley of Bayleys. "Total investment in the property has been estimated at $25 million, ensuring that it meets the rigorous international production standards.

"The fitout alone is estimated to have cost $12 million, enabling it to meet the strict health and safety legislation under which the company operates, producing food, health supplements and pharmaceuticals for New Zealand, Southeast Asia including Singapore, Malaysia and Japan, and also Australia where Vitaco has a major presence."

Within the facility there are 1829sq m of offices on three floors, with the main 1425sq m office space on the first floor. Two large high stud warehouse areas comprise 5272sq m of warehouse space, including a laboratory area, plant and change areas, plus a second, 1807sq m ground floor warehouse space used as a high level racking area.

The property includes a 285sq m enclosed truck dock area, a 489sq m goods canopy and a separate 2430sq m carparking building which provides 185 parking spaces. The 18-year lease to Vitaco Health NZ Ltd currently brings in a rental of $1,536,639 per annum and started on April 1, 2009. Three further rights of renewal of three years take the final expiry date to March 31, 2036. Rent reviews are three yearly and are linked to CPI.

Greg Goldfinch of Colliers says that long leases are essential at present in order to attract the investor market. "The deals we have seen and been involved in over the past few months show that long leases are the key to unlocking the value at the moment. Examples of this include the 15-year Fisher & Paykel Appliances lease on Springs Rd and the 20-year leases for some of the Downer EDI Works portfolio of properties we sold late last year. Lengthy leases provide security of income and an opportunity for buyers to see significant rental growth over the long term."

However, both Goldfinch and Stanley agree that high quality tenants are equally important at this point in the cycle. "Not only is Vitaco Health a leading international company in the health food and natural supplements industry, with a turnover of approximately $175 million," says Goldfinch, "but the company has grown at an annual rate of 10 per cent for a number of years now."

John Bolton of Bayleys says the development of the Kordel Place facility has allowed Vitaco to bring under one roof its Healtheries and Nutralife head offices, laboratories, manufacturing and warehousing. "It now provides space for around 400 staff in the heart of East Tamaki, surrounded by modern office warehouse facilities."

Bolton says the East Tamaki area is one of Auckland's fastest growing business precincts. "In the year to January 2008, the area saw 54 per cent of the city's industrial development, with over 146,000sq m added to the precinct's floorspace inventory."

He also points to a number of major infrastructure improvements that have been commissioned in the region by national and regional government agencies to promote and support continued population and business growth, including the western ring route motorway.

"When this is complete, it will provide an alternative north-south motorway link to State Highway 1. Also, once the $210 million SH20-SH1 Manukau extension is complete this year, it will provide better access to Auckland airport."

Kordel Place has easy access to the Southern Motorway via Te Irirangi Drive, the Manukau interchange and via Highbrook Drive, placing it about 20km south of Auckland's CBD and within 15km of Auckland airport.

According to Colliers research, the East Tamaki precinct experienced modest growth in the second half of 2009. "Overall, industrial land values in East Tamaki remain around $315 per sq m on average," says Hooper. "Well located and high quality industrial premises are still the preferred option for tenants."

Hooper says investment yields in the precinct remained stable at 8-8.75 per cent for a typical industrial property over the review period.

"Activity is picking up in this area, as evidenced by the flurry of transactions in the last few months. Location, building quality and tenant status still top the investor's check list and the Kordel Place property ticks all these boxes," says Hooper.

"This is a high quality passive investment opportunity and a great chance to obtain a freehold interest in a prime investment property with a long term lease to a leading international brand.

Its high stud warehouse and amenity are suitable for a number of uses over time and the property's CPI-linked rental growth is another big attraction."