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Property investors set to ‘milk it’ as farm supplies outlet goes up for sale

Tags: Rural

The land and buildings housing the branch of one of New Zealand’s biggest farm and lifestyle block supply firms have been placed on the market for sale.

The Taupiri branch of Fonterra-owned Farm Source encompasses some 986 square metres of warehousing and office premises, sitting on 3,948 square metres of land.

Taupiri is located beside the Waikato River approximately 25 kilometres north of Hamilton – servicing farms as far north as the Bombay Hills, and across to the western shores of the Firth of Thames.

Farm Sources is the current incarnation of the brand previously known as RD 1 – the trading subsidiary of Fonterra Co Operative Group. In 2014 Fonterra undertook a rebranding of its RD1 entity – changing its name to Farm Source, and broadening its retail appeal to encompass all aspects of the rural sector…. from dairy and dry stock farmers through to lifestyle block owners with a handful of countryside ‘pets’.

Customer comforts such as lounges, meeting, and seminar rooms, along with complimentary high speed wifi were added to the rebranded Farm Source retail centres with the aim of creating business hubs within a retail environment. Seventy stores now operate nationally under the Farm Source moniker.

The freehold commercially-zoned land and buildings housing Farm Source at 1 Railway Road in Taupiri are being marketed for sale at auction on September 14 through Bayleys Hamilton.

Salesperson Josh Smith said the structures on site were divided into a warehouse-style open plan showroom with offices, lunchroom and associated staff and customer amenities, and a high-stud bulk supplies warehouse serviced by three large roller door entry points.

The location’s 473 square metre bulk store has an initial evaluation process (IEP) earthquake rating of 80 percent, while the 479 square metre steel-framed iron-clad retail store has an initial evaluation process (IEP) earthquake rating of 70 percent,

Farm Source is currently on an eight-year lease at the property, generating annual rental of $137,842 + GST, and running through until 2023, with four further three-year rights of renewal.

Mr Smith said that over the past decade, both the retail store and bulk warehouse buildings at the Taupiri location had been expanded and upgraded to house the constantly changing demands of its clientele.

“Through this initiative, Farm Source as the sole tenant has set itself apart from the competition in the dairy farm sector. Fonterra suppliers are offered deferred payment plans to support their seasonal cashflows and Farm Source accounts are reconciled through direct debiting of milk solid payouts,” Mr Smith said.

“Most Fonterra customers are shareholders in the cooperative – providing a loyal clientele to the Farm Source stores. This is particularly pertinent for the Northern Waikato region which is one of the highest yielding dairy regions in the country.”

Mr Smith said the Railway Road depot benefited from dual entry points – allowing for a one-way traffic flow to collect products – and is fully fenced, Hazardous chemicals are stored on a concreted bunting pad, which ensures any spills are controlled.

Products stocked within the showroom and warehouse feature animal feed, hardware, fencing equipment, clothing, animal husbandry and stock management equipment, agri’ chemicals, machinery, fertiliser, and nutritional supplements.

Bayleys has been instrumental in selling down multiple Farm Source retail outlets over the past two years. Among the Farm Source branches that have traded hands are operations in: Galatea in the Bay of Plenty; Ngatea in the Hauraki Plains; Opunake in Taranaki; Matamata, Morrinsville and Putararu in the Waikato; and Kopu in the Coromandel.

“The attraction of having such a strongly-branded tenant in place has consistently proven to be a reassuring factor for investors – most of whom are based in rural locations in close proximity to the outlets they have purchased,” Mr Smith said.

“The combination of Farm Source’s successful retail repositioning strategy, combined with the generally positive trading environment sustained in many rural services-based townships throughout the upper North Island – has meant investment in the commercial real estate sector of these towns has attracted strong support from farmers.”

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