Solid profits projected with lab-tech tenant

Thermo Fisher Scientific New Zealand Limited is a major producer of scientific equipment. Photo / Supplied

Tenanted by Thermo Fisher Scientific New Zealand, a 4149sq m standalone office and warehouse complex with 69 car parks at 242-244 Bush Rd, Albany, is being offered for sale to multiple investors by Maat Consulting via a proportional ownership scheme, projecting 8.9 per cent annual pre-tax returns.

The Bush Rd proportionate ownership comprises 138 interests of $25,000 per interest with the minimum initial investment from each investor being $50,000 or two interests in the scheme.

An investor wishing to invest more in the scheme can purchase multiples of $25,000 after the initial investment. The scheme is being marketed by John Newton of Barfoot and Thompson North Shore Commercial, who says the property will be acquired and held by Bush Road Property Investments as the nominee and as bare trustee on behalf of all investors.

"The nominee's sole purpose is to hold the property for and on behalf of investors," Newton says.

"All 138 interests must be subscribed for before the nominee can purchase the property and the scheme can proceed. The purchase price of the property is $5.9 million plus GST, if any, and the purchase will be as a going concern and therefore zero-rated for GST purposes.

"The subscription proceeds of $3.45 million, together with limited recourse secured bank borrowings of $2.714 million, will be applied to the purchase of the property." Newton says that, based on the forecast return, investors will receive a $2225 cash return annually per $25,000 invested, with the first monthly payment of $121.92 or part thereof, per interest to be paid on August 31 and monthly thereafter.

Newton says the 242-244 Bush Rd property was valued by Darroch of Takapuna at $5.9 million at June 23. The interest rate on the BNZ bank borrowings has been assumed to be commencing at 6.05 per cent and rising to 7.55 per cent during the reporting period. This equates to interest payments of $178,321 for 12 months ending July 31 next year, with no principal repayments during the term of the loan. It has also been assumed that the level of bank borrowings will be 46 per cent of the cost of the property of $5.9 million. The ownership and management deed governing the operation of the scheme will be entered into with Maat Consulting as manager of the scheme and Bush Road Property Investments as nominee.

"The offer will close at 4pm on Wednesday, July 28, but Maat Consulting as offeror reserves the right to close the offer prior to this date or extend the offer past this date by up to 10 working days," Newtown says. Settlement of the property is scheduled for August 11.

Newton says the investment is being made into a multifunctional, exposed property that has an established sitting tenant, Thermo Fisher Scientific New Zealand.

Newton says the quality of the established tenant is a major attraction for investment in the proportional scheme.

Thermo Fisher Scientific New Zealand Limited is New Zealand's largest provider of scientific instruments and consumables for the scientific and medical markets.

It was previously Biolab Scientific, a division of the Biolab Group which emerged from its former group name Smith-Biolab Ltd, the largest manufacturer of pharmaceutical equipment in Australasia and the Pacific.

Thermo Fisher Scientific leases the property for $520, 890 per annum backed by a bank guarantee equal to six months rental and outgoings.

The lease commenced June 1, 1998 to May 31, 2015 with one right of renewal taking the final lease expiry to May 31, 2020. The prospective financial statements assume there will be an increase in rental of the greater of the CPI or market rental value applied to the tenant at each review date during the term of the lease.

"Financial statements as at May 31, 2009, record the total revenue of Thermo Fisher Scientific New Zealand Limited as $48,405,000 and net profit of $4,732,000 with net assets of $8,579,000," Newton says.

"The tenant has confirmed its expected turnover for the 2010 financial year will exceed $46 million and its net assets as at May 31, 2010 will exceed $10 million."

Maat Consulting Limited, as manager of the scheme will be responsible for the payment of monthly income distributions to investors along with maintaining accounting records and making timely reports to investors.

Newton says the directors of Maat Consulting have considerable experience in business strategy, property finance and governance.

"Maat Consulting specialises in providing investment solutions to assist clients grow and protect their wealth through commercial property, equities and highly rated fixed interest opportunities.

"Each of its directors has extensive experience in chartered accountancy and strategic advice."

The directors of Maat Consulting Ltd, which has its registered office is at the offices of Lithgow & Associates, in Stratford, Taranaki, are Neil Tuffin, Mark Hughson, Bruce Ellis and Bryan McFarlane.

"Maat Consulting Limited intends to engage Verve Property Management Limited to manage the property on a day-to-day basis," Newton says.

"This company has extensive experience in commercial property management and currently manages in excess of 100 tenants with a property value of approximately $50 million."

Maat Consulting, as the manager of the investment scheme, will receive a management fee of 1.75 per cent plus GST of the annual rental received along with an annual accounting fee of $3500 plus GST and an annual syndicate servicing fee of $3500 plus GST in the first year of the scheme.

The fees will be adjusted annually by the movement in the Consumer Price (All Groups) Index; and on the eventual sale of the property, Maat Consulting will be paid an exit fee equal to 2 per cent plus GST of the profit achieved on the sale.