Auckland, 7 May 2016 - Eight well established rural supply stores, strategically positioned in key North Island provincial locations are up for auction early next month, offering passive investors the chance to gain low-risk exposure to the agricultural sector.
The Farm Source stores located in the Waikato, Hauraki Plains, Bay of Plenty, Taranaki and Horowhenua are being sold on behalf of RD1 Limited, a wholly owned subsidiary of Fonterra, All but one of the properties are for sale with initial eight-year leases to RD1 plus rights of renewal.
The properties are being marketed jointly by Bayleys and CBRE.
Bayleys Bay of Plenty, Waikato and Taranaki commercial manager Richard Graham says the well maintained and newly branded properties are all located in provincial towns and are strategically positioned to service surrounding rural catchments.
He says the properties will not be sold prior to auction and offer an exceptional opportunity to acquire high yielding, affordable investment properties with the security of new long-term leases to New Zealand’s largest agricultural group.
“With net rentals ranging from $38,783 to $172,459, they are in an accessible price bracket for smaller investors and family trusts and are likely to provide higher income returns than properties with similarly long, strong leases in larger urban centres. Those returns will also be inflation proofed through two-yearly rental adjustments to the Consumer Price Index.”
Established in 2002 with the consolidation of the trading store networks of both the New Zealand Dairy Group and Kiwi Co-operative Dairies Limited, RD1 has an established track record of supplying and retailing to rural communities throughout New Zealand, says Jeremy Keating, CBRE’s director of agribusiness.
“As part of a transformation initiative, its 71 stores are being progressively transitioned to trade as New Zealand Farm Source, with any remaining works on the properties for sale to be completed prior to settlement.
“The aim is to establish rejuvenated Farm Source branches as ‘one stop’ farm services retailers – selling animal feed, shed supplies, hardware, fencing, clothing, animal husbandry and stock management equipment, agri’ chemicals, machinery, fertilizer, livestock and nutritional supplements. Their staff will also provide advice and support to rural communities,” says Keating.
“With many of the stores in the nationwide network now trading as Farm Source outlets with long-term leases, the opportunity is being taken to free up capital to redeploy within the business – providing the chance for investors to secure well leased and located rural properties which otherwise would be very difficult to obtain.”
Half of the properties are located in the Waikato and Hauraki Plains and will be auctioned in Bayleys’ Hamilton office at 96 Ulster Street at 2pm, Thursday June 2. All offer new eight year leases to RD1 from the settlement date of July 2, with four three-year rights of renewal.
The largest store of 1,052 sqm is located at 104 Broadway, Matamata and will produce net annual rental income of $172,459 plus GST. Bayleys Waikato’s Blair Hutcheson says the store is located on a substantial 2719 sqm L-shaped site that has high exposure to Broadway (State Highway 24) and provides drive-through yard access and parking.
“The store is a big supporter of local school events, sponsors a local rugby team, the Matamata A&P show and participates in a range of fund raising events so it has a strong presence in the community.
“Commercial property tends to be tightly held in well proven rural locations like Matamata so this is a big opportunity to secure a high profile property in one of the country’s most prosperous provincial towns.”
In nearby Morrinsville, a similar sized Farm Source store of 1043 sqm on a 2772 sqm site at 178 Thames Street will generate net annual rental income of $152,024. Bayleys Waikato’s Josh Smith says the store has been located in the centre of town for over a decade and benefits from convenient dual street frontage and plenty of customer parking. Surrounding retailers include The Warehouse and a number of well-established local businesses.
“The area around Morrinsville is among the most intensively dairy-farmed regions in the world, hence the town’s 'Cream of the country' slogan and this is a chance to own an important part of heartland Waikato,” Smith says.
Smith and Jeremy Keating are also marketing a more recently established Farm Source store at 59 Orchard Road, Ngatea on the Hauraki Plains. The 596 sqm store together with 119 sqm of canopies is located on a 4555 sqm site will return net annual rental income of $124,750.
Prominently located on State Highway 2, this store services the vast surrounding Hauraki Plains rural area, Keating says.
“The primary sector continues to strengthen on the plains and a commercial section next door has been acquired, which is included in this sale, to enable the store to be expanded. The vendor is therefore looking for an investor willing to outlay additional capital up to a maximum of $600,000 to facilitate this over the next two years. There is an additional clause in this lease that covers those obligations as well as the commensurate increase in rental that will result. This is an opportunity therefore for a more active investor wanting to be part of the continuing growth of this region.”
In the South Waikato, a 1089 sqm store on a 2,313 sqm site at 20 Kensington Street, Putaruru, is offering net annual rental income of $108,815. Bayleys Waikato’s Blair Hutcheson says the property is conveniently located just off the town’s main roundabout and close to Bunnings Warehouse and State Highway One
“This store has been servicing the surrounding rural community for over 20 years, supplying on-farm advice and support as well supplies,” he says.
In the Bay of Plenty, a 479 sqm store on close to 5,000 sqm of land in Horomanga Road, Galatea offers an opportunity for small investors to gain exposure to the rural property market with its new eight-year lease generating net annul rental income of $38,324.
It will be auctioned in Rotorua on Thursday June 2 at 1pm. “This longstanding store is the only rural supplies retailer servicing this important agricultural catchment, with nearest competitors in Whakatane, Rotorua and Taupo, and has been a strong supporter of local schools and clubs,” says Bayleys Rotorua agent Mark Rendell.
Further south, two Taranaki and one Horowhenua Farm Source properties will be auctioned in New Plymouth and Palmerston North on June 1 and June 2 respectively. They are:
A 1,125 sqm store, together with 145 sqm of canopies is located on a 3054 sqm site at 62 Tasman Street Opunake in the heart of Taranaki’s dairy belt. Located on the main street in the centre of town, with three street frontages including to State Highway 45, the property’s new eight year lease will provide initial annual rental income of $113,580.
A 400 sqm small format store on a 1,245 sqm site at 68 Tauhuri Street, in the Taranaki township of Manaia which will generate net annual inncome of $38,815 from an initial three-year lease. It is located just off the town’s main roundabout which also connects with State Highway 45.
A 1,294 sqm art deco buildings of which 806 sqm is utilized with a 105-year history of servicing the surrounding farming catchment on a 6552 sqm site at 25 Stafford Street, Shannon, Horowhenua. It comes with an eight-year lease from settlement producing net annual rental income of $79,970.
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