PMG Property Funds Management Limited (PMG), with conservative bank borrowings, is acquiring an industrial property at 11-13 Gough Street in Seaview, Wellington, and the high-profile Bethlehem Town Centre in Bethlehem, Tauranga for an estimated total of around $107.6 million.
PMG chief executive officer and director Scott McKenzie told investors in Tauranga in June that the two properties have a very high occupancy rate with recognised national and multi-national tenants including Kmart, Countdown, BP, Chemist Warehouse and Smiths City (at Bethlehem Town Centre), and HJ Asmuss & Co (in Gough Street).
The latter is a privately owned supplier and distributor of steel in New Zealand with previous clients and projects including Fonterra and the Forsyth Barr Stadium.
According to PMG the acquisitions opened another exciting opportunity to invest in PMG Generation Fund, which offers a mix of industrial, retail and office properties.
Open to all New Zealanders, PMG was offering investors between 63 and 69 million units ($68.67m to $75.21m) at $1.09 per unit in PMG Generation Fund in the offer.
It comes with an accessible minimum investment threshold of 1,000 units ($1,090) and parcels of 1,000 units thereafter, from now until 5pm 29 July 2021 (or earlier if the offer is fully subscribed).
High performing asset
The acquisition of Bethlehem Town Centre means this popular and high-performing large format retail centre will now be owned by New Zealand investors, said PMG.
“We are particularly excited to be providing New Zealanders, including our hometown Bay of Plenty residents, the opportunity to invest in their own backyard and in a high-quality and well-known property at the heart of one of Tauranga’s fastest-growing suburbs,” said McKenzie.
The purchase of 11-13 Gough Street in Wellington will also provide additional rigour and diversity to PMG Generation Fund’s portfolio, he added.
“The property is close to main arterial networks and is fully leased to Asmuss, a business that was founded in 1920 and has occupied this property for over 20 years, making it an excellent prospect for our investors.”
Getting Kiwis into commercial property
PMG launched PMG Generation Fund in 2020 with the aim of helping more New Zealanders gain access to the benefits of investing in commercial property, providing regular income and the opportunity for good capital growth on their investment.
Additionally, investors have the choice of reinvesting the monthly income the Fund provides into PMG’s Reinvestment Plan, so they can enjoy the benefits of compounding returns.
New Zealanders love land, bricks and mortar, but growing headwinds in residential property investment is now making commercial property
a more sought-after investment option.” – Scott McKenzie
Following this offer and acquisition of the two properties, the total estimated portfolio value of the Fund will be $166 million, comprising of five quality commercial properties. With each property located within main metropolitan centres across New Zealand, the Fund is further underpinned by notable tenants, including some that are classed as essential services, providing further confidence around the Fund’s income resilience for investors.
Denis McMahon, founding director and chairman of PMG, said the quality and scale of the two intended acquisition properties located in Tauranga and Wellington align with the Fund’s strategy – to grow a portfolio of strategically selected assets that provide building, tenant, sector and geographic diversification.
Since its inception, PMG Generation Fund has delivered a gross cash distribution return of 5.80 cents per unit to its original investors and has seen a significant increase in the value of its underlying property assets.
With a forecast gross cash return of 5.5% p.a, paid monthly, this offer delivers an attractive passive income so investors can enjoy the lifestyle they love, well into the future.
“New Zealanders love land, bricks and mortar, but growing headwinds in residential property investment are now making commercial property a more sought-after investment option,” McKenzie said.
“Historically low interest and term deposit rates mean investors are looking elsewhere for compelling returns.”
According to McKenzie, local investors see New Zealand commercial property as a good place to invest their capital for the long term as a natural hedge against inflation and for regular returns.
“Our last two investment offers in two of our unlisted commercial property funds were fully subscribed well before the offer close dates. Not only are we seeing more demand from investors in our funds, it is coming faster and in larger parcels.”
The offer opened Thursday, 10 June 2021. Applications to acquire shares must be received no later than 5.00pm 29 July 2021 (or earlier if the offer is fully subscribed). This offer is not available to investors outside of New Zealand.
The funds PMG offers and manages on behalf of investors include PMG Generation Fund, a fund designed to make commercial property investment possible for all New Zealanders; Pacific Property Fund Limited, a fund which invests in geographically and category diverse properties; and funds which invest in category specific assets, including PMG Direct Office Fund, PMG Direct Childcare Fund, and PMG Capital Fund Limited.