Retail complex calls investors

The Goddards Centre in Tauranga boasts Glassons, Esquires and Rialto Cinemas among its tenants. Photo / Supplied

The Goddards Centre, a shopping complex in the heart of the Tauranga CBD leased by a number of well-known branded tenants, is being offered for sale to investors under a proportional ownership scheme.

The centre has 22 tenancies including Life Pharmacy, Moochi, Rialto Cinemas, Caci Clinic, Esquires and Glassons. The syndication is being marketed by sales consultants Robert Pinny of Bayleys Tauranga and Jack Downer of Bayleys Auckland.

Pinny says an initial yield of 9.5 per cent is forecast for the first 12 months of the scheme. "A selection of floating interest rates on the secured bank borrowings has the potential to increase the yield to approximately 9.9 per cent per year," he says.

The property is owned by the NZX-listed National Property Trust and, with the capital from the sale of all 103 parcels in the scheme plus borrowings from the bank of $5.22 million, the property will be sold to Goddard Holdings Ltd for $12 million.

The Goddards shopping centre was developed in 1992 and was extensively refurbished in 2004, and again in 2008.

"The centre was developed to create a dynamic and modern shopping environment.

"The refurbishments have transformed the centre into a fashion destination, and it's now a retail focal point of downtown Tauranga," says Pinny.

The shopping centre is at 21 Devonport Rd, with site access from both Devonport Rd and Grey St, making it a pedestrian hot spot that creates a link between the two streets.

"Devonport and Grey St are key retail destinations in Tauranga, and developments surrounding the Goddard Centre are retail and small office space typical for a CBD," says Pinny.

The site's total area is 2450sq m in four titles with an estimated value of $4996 a sq m.

The Goddards syndication offering opened to the market in June and was initially scheduled to close on July 7. However, a further 33 of the 103 parcels must be sold for the deal to go unconditional, so the syndication deadline has been extended until September 15.

Pinny says the offeror of the syndication scheme is Goddard Holdings Ltd, which is offering 103 interests at $75,000 each. Investors may purchase one or more units.

"A proportionate ownership scheme gives investors an opportunity to own part of a large commercial property, without having to commit a huge amount of capital, and with the benefit of professional management," says Pinny.

"It's an excellent opportunity for investors who are unfamiliar with commercial property investment to make an entry into the market, while still earning a passive return on their investment.

"Interestingly, the ASB Bank's latest confidence survey shows property reclaiming top slot as the preferred investment vehicle - ahead of bank savings and shares.

"Some 18 per cent of those polled by ASB said rental property offered the best returns - up from 15 per cent three months earlier, with bank savings slipping to second place."

Pinny says significant progress was made in selling syndication parcels over the first four weeks of the campaign and he is confident of selling out the syndication in advance of the September date.

"We anticipate on-going strong interest from throughout the greater Bay of Plenty." Pinny says each investor, upon acquiring a proportionate share of the property, will be entitled to a proportionate share of the rent paid on the property on a monthly basis - after the deduction of expenses.

The centre's well-established tenants with long-term leases include:
Glassons Ltd, claiming to be New Zealand's "most visited" fashion store with 135 outlets in New Zealand and Australia, which pays annual rent of $122,400 on a six-year lease that expires June 2014.

Moochi, a boutique fashion label designed in New Zealand, that pays rent of $43,560 a year - also on a six-year lease term expiring June 2014. Goddards Coffee Ltd/Esquires, with 35 stores in New Zealand, paying annual rent of $21,000 on a 12-year lease to December 2018. Rialto Cinemas Tauranga, which features three boutique cinema screens, on an eight-year lease of $100,000 a year set for expiry in July 2013. Step Inn Shoes, which has been located in the Goddard's Centre for the past 16 years offering a quality selection of footwear, and paying annual rent of $55,400 on an eight-year lease due to expire in May 2016.

The property will be managed by Realty Management Services Ltd, a subsidiary of Realty Services Ltd, which wholly owns the Bayleys and Eves Real Estate agencies in the Bay of Plenty and Waikato.

"The property manager, who is responsible for day-to-day and all other property management issues, will be Paul Kilsby, who is extremely well-qualified with more than 15 years' experience in property management and more than 23 years in the property industry," says Pinny.

"His property management experience includes 10 years of managing retail, office and industrial property for ASB Bank nationally, and for Jones Lang LaSalle and Commercial Property Managers in Auckland."

Pinny says the management fee is 4 per cent plus GST of the net annual rent, which is principally recoverable from the tenants, together with a scheme management fee of $10,000 a year which will be paid out of the scheme's gross income monthly.

Successful proportionate ownership schemes completed recently include KCL Property's syndication of the site leased by Billabong in Albany, Auckland, and the Augusta Funds Management syndication of 510 Mt Wellington Highway, Auckland.