Breaking new ground

Breaking new ground

Total Property - Issue 7 2018

Setting up a commercial property development and management company two decades ago was perfect timing for Shaun Stockman, but it came crashing down during the Canterbury earthquakes.

From his company KPI Rothschild's 30-property portfolio, 20 inner-city buildings were destroyed. “I remember sitting in a cafe outside Christchurch with my accountant three days after the earthquake and he said 'you might have lost your inner-city property portfolio',” he recalls. “It was rough ride.”

KPI Rothschild – owned by Stockman, his childhood friend Dean Marshall, and Dean's brother Grant – sat down and made hard decisions on each property.

The company has since built up a portfolio of 40 heritage and new properties, turning over millions in cashflow and earning 6-7 percent on valuations.

After the quakes, Stockman led the group that pushed the Re:START container mall on Cashel Street to draw retailers and shoppers back into the inner city.

Stockman first worked as a panel beater when he left school; he went on to own a car sales company. His interest in property began at 24 when he bought a cottage as an investment.

He later became a real estate agent before turning his focus to commercial property investment, “begging and borrowing” to start the award-winning development company with a bent for heritage properties.

Two jewels in the crown today are the Stranges Glendenning Hill building and the three-storey Bonnington's House, built in 1882 on the corner of Lichfield and High streets.

Would Stockman do it all over again? Yes. Asked about the keys to success, he says: “Several things help – hard work, passion, drive and luck.

“Hard work buys opportunities. Many of the good buys are those that other people overlook and don't see the angle.”

Stockman says the banks' tightening of lending rules might put developers off joining the industry. “But if you can beg and borrow to get off the ground, and work with partners with different skills, it’s possible to achieve great things.”

Second-generation Auckland-based developer Kim Hughes says hard work, prioritising people and relationships have contributed to the success of Broadway Property Group (BPG), which he owns with his brother Adrian and Scott Kennedy.

They are the sons of founders Neil Hamill, Lindsay Kennedy and Dave Hughes, who started with a spare piece of land from an East Tamaki timber yard which they built on and later sold in 1985.

Concentrating on industrial design-and-build projects in the 1990s, the original trio developed a portfolio mainly in Mt Wellington, and more recently completed design-and-build retail centres such as Botany Junction.

Many of the properties remain in the portfolio established by the founders, which BPG actively manages.

The new generation have commerce and property degrees. “We all worked on site at different times during the uni holidays, doing general labouring work,” Kim Hughes recalls.

Kim was the first to join the firm in 2005; the other two joined over the next couple of years. Their first purchase, in 2009, was a retail building in Ellerslie with six tenants in need of refurbishment.

Their portfolio has since grown through concentrating on under-performing retail centres and difficult properties. Since taking over two years ago, they have bought more than 20 properties and now manage 150 tenants.

One of their biggest developments started in 2006 as a joint venture with Drinkrow Industrial Estates. It’s a 12ha quarry in East Tamaki known as Highbrook East. The last two developments – a 4,000m2 warehouse for Suntory and a 3,000m2 warehouse for Spanish company Cosentino – are under construction.

Hughes bought the old Honda building in Wiri and is refurbishing it into a headquarters for HEB Construction, and the group is launching a 38-apartment development in Millwater.

They have $70 million under development and have received seven Property Council awards.

The key to success? “You need to trust the maths,” says Hughes. “Especially in uncertain times. It’s about working with the right people and keeping good relationships as a priority, and the projects come after that.

“Taking a longer-term view and not becoming impatient is part of success. Growing a property portfolio is not dependent on phases of the cycle. We actually try to operate in a more counter-cyclical way.”

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