The investor group that bought the property is a diversified fund established by Mount Maunganui’s Classic Collectives Limited, which specialises in premium commercial and industrial real estate and operates in conjunction with Classic Group. This property was intended to seed the fund.
Classic Collectives’ other funds include medical assets, industrial properties, office blocks and bulk retail stores, including supermarkets. The company aims to have $300m of assets under management by the end of 2025.
A commercial site in Tauranga, which houses Noel Leeming, Animates, Chemist Warehouse and Elite Fitness, has been sold for $18.6m.
Classic Collectives director Daniel Watkins said the Cameron Rd purchase showed that investors had confidence in the future growth of Tauranga’s CBD, and that it was possible for locals to own a share of prime assets.
“Our syndicates bring together individual investors to pool their funds, allowing them to own a premium commercial or industrial property that they wouldn’t otherwise be able to afford on their own.
“This Cameron Rd property is unique in terms of its high-profile location and the fact it’s nearly half a hectare of land with four strong national tenants, providing diversified income.”
Watkins said it was “one of the best sites in the CBD” and its underlying value was in its future development potential.
“That’s not to say that we will redevelop it ourselves, but it will happen one day.
“It can stay as a straight investment asset or it could be developed in the future, so it gives our investors more than one exit option.”
The property was previously owned by private family interests outside of the Bay of Plenty, and commercial real estate firm Colliers negotiated the sale.
Watkins said the new diversified fund was looking to create a portfolio of properties in a range of asset classes.
“We’re looking to create a multi-asset fund to help spread the risk, generate multiple income streams and lower our funding costs. We are looking right across New Zealand, wherever we see premium quality opportunities,” Watkins said.
Classic Group director Peter Cooney said scarcity of land, high inflation and rising construction costs all contributed to a nationwide market slowdown in the past few years, but lower interest rates had made a “massive” difference to the viability of projects.
Classic Group was involved in two major developments under way in Tauranga’s CBD – the new Craigs building at 2 Devonport Rd, and a new office block on Durham St.
“Local developers are confident in Tauranga’s CBD and continue to invest. We see it as a growth area,” Cooney said.
“The port is a big part of the growth of the Bay of Plenty along with the kiwifruit industry.
”It’s a desirable location for many people, and it’s one of the fastest-growing areas in New Zealand and will always continue to be. We still see big potential here.”
Colliers Tauranga managing director Simon Clark said larger assets such as this were starting to sell “after a slow couple of years” following lowering interest rates.
“Larger private buyers, corporates and syndicators like Classic [Collectives] are remerging into the market as they can borrow money more cheaply and offer attractive returns to their investors.”
Clark said it was an “astute investment” for Classic Collectives, as it had substantial buildings with long-term tenants for secure rental income and valuable underlying land.
He said Colliers was selling one of the city’s largest office buildings, tenanted by Mercury Energy in Durham St, which was valued at about $50m.
“We are also getting strong interest from out-of-town buyers who are impressed with what is happening in the CBD Tauranga and can see good capital growth there in the near future.”
Priority One chief executive Nigel Tutt said the purchase was an “excellent show of confidence in Tauranga and its CBD by a group of successful local investors”.
“It’s a great location and will benefit from Tauranga’s future growth.”
Megan Wilson is a health and general news reporter for the Bay of Plenty Times and Rotorua Daily Post. She has been a journalist since 2021.
