Six Fonterra Farm Source stores have sold at auctions around the North Island after generating strong bidding competition from investors.
The properties, which were auctioned by Bayleys, sold at a total value of $9.9 million, all with eight year lease backs to RD1, a wholly owned subsidiary of Fonterra, from their settlement date of July 23.
“The offerings generated a lot of interest and we would have had at least a dozen bidders in our Hamilton auction room competing for the four properties that went under the hammer there,” says Richard Graham, Bayeys' commercial manager for Bay of Plenty, Waikato and Taranaki. “Three of those properties sold at yields of between 6.4% and 6.7% after spirited bidding which reinforces the fact that good quality regional properties with strong lease covenants are attracting plenty of demand and excellent outcomes for vendors. They are also providing higher income returns to investors than are available in metropolitan markets."
The highest sale price achieved was $2,610,000 for a 1052 sq m Farm Source store on a 2719 sq m site at 104 Broadway, Matamata (SH 24) which sold at a 6.6% yield through Blair Hutcheson, Bayleys Waikato.
In nearby Morrinsville, a 1043 sq m store on a 2772 sq m site at 178 Thames Street, in the centre of town with dual street frontage sold for $2,305,000 at a 6.6% yield through Josh Smith, Bayleys Waikato.
The lowest yield of 6.4% was achieved on a 596 sq m store with 119 sq m of canopies on a 4555m² site at 59-65 Orchard West Road (SH2) Ngatea which went for $1,950,000 at a 6.4% yield through Josh Smith. The other Farm Source properties to sell were:
14-20 Kensington Street, Putaruru: a 1089 sq m store which has been servicing surrounding rural community for over 20 years on a 2313 sq m site close to town’s main roundabout sold for $1,385,000 at a 7.85% yield through Blair Hutcheson.
64 Tasman Street, Opunake: a 1125 sq m store plus 145 sq m of canopies on a 3054 sq m main street (SH 45) site, with three street frontages,sold for $1,250,000 at a 9.1% yield through Alan Johnston and Iain Taylor, Bayleys New Plymouth and Jeremy Keating.
All of the lease backs to RD1 have two-yearly cumulative CPI adjustments and will be reviewed to market on renewal and two-yearly thereafter. After the initial eight year lease there are four three-year rights of renewal.
RD1 has 71 rural stores around New Zealand which are being progressively transitioned to trade as Farm Source as part of a transformation initiative to provide ‘one stop’ facilities providing rural supplies services as well as advice and support to rural communities.
Two other properties in Bayleys Total Property portfolio also sold at the Hamilton auction. A 2.1154ha landholding at 14 Koppens Road, Tamahere, near Hamilton, rezoned to Lifestyle 2 after former Icepak coolstore premises were destroyed by fire in 2008, sold for $865,000 at $40.89 per sq m. The property was sold vacant, with buildings cleared and just concrete floor pads remaining, by Richard Graham and Mike Swanson, Bayleys Waikato. The land has potential for at least three lifestyle blocks.
In Waihi, 1510 sq m of industrial land at 8 Devon Street with a 490 sq m purpose-built facility comprising a funeral parlour and a separate three bedroom home was sold for $630,000 at a 7.5% yield by Josh Smith.