New player looks to cash in on slump

A new real estate business has been formed to buy properties at what it sees should be the bottom of the market.

While most listed property entities are quitting real estate fast, two Wellington-based executives are aiming to have real estate assets worth up to $50 million by the end of this year.

Troy Bowker and Matt Fraser have formed Caniwi Capital Partners, a firm specialising in commercial property.

It has just bought properties in New Zealand worth $16.5 million and is about to almost double that portfolio if it completes a contract to buy a large Auckland property.

Bowker said the recession meant now was the best time to buy real estate.

"It's a difficult judgment call picking the bottom of the market but the gap between financing costs and returns available for asset classes such as commercial property and private equity are now at a level where it makes sense to invest," he said.

"These recessionary times present a very difficult challenge to most businesses. However, to businesses with capital and the risk appetite to invest these conditions represent an enormous opportunity.

"We are fortunate to be in a cashed-up position and are actively looking for investments," Bowker said.

Bowker, married to a Canadian, said the firm's name was a combination of Canada and Kiwi. Caniwi owns a building in Calgary, Canada which is leased to the Japanese government. It has two New Zealand properties and an option on a third.

Caniwi paid ING Property Trust $10 million for The Warehouse Petone and has bought Mitre 10's headquarters at 46 View Rd in Glenfield for $6.5 million.

Fraser said the firm also had a contract on an Auckland property for $14.4 million.

Bowker said he returned to New Zealand last year with his family and established Caniwi with Fraser who had previously held senior management positions with NZ Post.

The firm has appointed former Ernst & Young NZ chairman Michael Stanley as an adviser to its board.

Bowker, 37, was a senior investment banker in London and New York, working at HSBC Bank and Swiss Re Capital Markets.

He said he had been responsible for transactions worth billions of dollars but frowns on the increasing number of properties being offered to investors through syndicates.

"The retail syndication market has the potential to be yet another investment product disaster for the long-suffering New Zealand retail investors.

"The syndicate managers are all too happy to pay over the market odds for assets with long condition periods to allow them to raise the equity from the public. If they manage to raise the money then they make their fees and the public investors are left with the risk in the deal; if they don't manage to raise the money in time they simply walk away and try to do the same again.

"It staggers me that Government regulators continue to sit on their hands and watch until problems arise with retail investment products, at which time is generally too late to protect the unsuspecting and vulnerable retail investors - in many cases retired couples investing their savings - from losses.

"The Government needs to be quicker and better at regulation when they spot potential problems with the retail investment market and investors need to be more circumspect, cynical and generally more financially savvy," Bowker said.

BUCKING THE TREND

COUNTER-CYCLICAL INVESTORS

* Robt. Jones Holdings. Bought the Forsyth Barr Tower on Auckland's Shortland St last month.

* John Sax of Southpark Corporation. Bought undeveloped parts of the $500 million Kensington Park, Orewa;

* Manson TCLM Developing new Telecom headquarters on Victoria St in Auckland;

* Newcrest Group The private business has just finished the new five-level NZI Centre on Fanshawe St.