Apple orchards on market
highly developed and efficient Timaru horticultural operation, with enormous potential for further productive growth, is on the market for the first time.
MA Orchards ( MAO) has landholdings totalling about 70.2 ha made up of four orchards over properties in Seadown, Timaru.
The orchards — at 333 Divan Rd, 189 and 174 Kerrytown Rd and 472 red for sale by deadline private treaty process, closing on Thursday November 17.
Colliers International Rural and Agribusiness sales specialist Richard O’Sullivan is marketing the properties involved in the sale with horticultural sales specialist Louise Wake.
O’Sullivan says offerings of this scale and quality seldom come to market. “MAO i s made up of four superbly developed orchards boasting very appealing economies of scale,” O’Sullivan says.
“Assets for this enterprise — offering modern planting techniques, excellent irrigation and extensive netting cover — include plant and equipment and water consents.”
On the Divan Rd block this comprises the main orchard facilities, including two large sheds, an office and a four bedroom dwelling.
The assets are available as a going concern business, or separate offers will be considered for one or several parcels of land included in the offering. An ongoing orchard management contract could also be available to the new owners along with the existing supply agreements.
O’Sullivan says these supply agreements offer attractive future income security.
“MAO is an export driven horticultural operation focussing on growing quality export volumes of the Honeycrisp apple variety under contract to Honeycrisp New Zealand Limited.
“Honeycrisp New Zealand Limited has key export contracts in place with established markets in North America and holds key industry relationships for the packing and processing of their fruit.
“The market demand for the Honeycrisp variety and the supporting infrastructure has been very well thought through. The first planted orchards are coming into increased production levels this season and the original crops planted in 2012 are expected to reach full production in 2018.”
Wake says with no leases in place on any of the infrastructure it allows the incoming purchaser multiple options.
“New owners will have the flexibility to run the property to suit.
“There is the option to either buy the property and put leases in place or run the whole venture as an owneroperator.”
A highly experienced manager on MAO is supported by 12 full- time and six fixed- term staff throughout the season for all aspects of the orchard operation.
The business has Registered Seasonal Employer ( RSE) status, and all Health and Safety aspects of the business are already contracted out.
The location of the orchards — 10 kilometres north of Timaru — was established to take full advantage of the flat, fertile land of South Canterbury’s alluvial river plains, ample rainfall and the cool coastal climate uniquely suited to Honeycrisp production, says Wake.
“Timaru is also the major service centre for the South Canterbury region and provides a growing sea port and stable regional population of 40,000 people.
“The region i s home to several vegetable and crop processing companies and Fonterra’s second largest milk processing site.” The 154- room Novotel Christchurch and 155- room Ibis Christchurch have sold, with ongoing management by AccorHotels.
According to the New York Stock Exchange the hotels went to an offshore investment company, which has an existing New Zealand hotel portfolio.
Dean Humphries, Colliers’ national director of hotels, who marketed the properties exclusively, says the combined purchase price of about US$ 31 million ( about NZ$ 43 million) reflects an attractive yield, given the leasehold tenure of the assets.
“These Christchurch hotels are strategically located in the heart of the CBD and in close proximity to Cathedral Square and the proposed Christchurch Convention Centre, to be developed by the Government and due to open in 2019.”
Humphries says the sale of these assets also marks the end of a 15- month divestment programme by Host Hotels & Resorts, the largest lodging real estate investment trust in the United States, with the Novotel and Ibis Christchurch being the last assets in its New Zealand hotel portfolio to be sold down.
“Colliers was extensively involved with the divestment programme comprising seven Novotel and Ibis branded hotels in Auckland, Wellington, Christchurch and Queenstown. This portfolio, with a total of 1158 guest rooms, represented the sale of the largest tranche of hotels completed in New Zealand since the NYSE- listed hotel REIT acquired these assets from Tourism Asset Holdings Limited and AccorHotels in December 2010.”
Humphries, who was involved in the sale of all seven hotels in the portfolio, says Host Hotels & Resorts decision to individually divest each asset, as opposed to a portfolio sale, paid off handsomely.
“Record prices were achieved for each asset, so the vendor secured a very large premium.
“The record prices were also a reflection of the current strength of the New Zealand hotel investment market.”
Overall, this portfolio was successfully sold down, via five transactions, with a total reported price of about NZ$ 257 million, an increase of about 38 per cent on the original reported acquisition price of about $ 186 million.
“The entire divestment process was hotly contested with significant international and local interest. The hotels were snapped up by a mix of investors with existing hotel assets in New Zealand.”
In terms of the recent Christchurch sales, Humphries says that with a total of 309 rooms, this combined sale of the Novotel Christchurch and Ibis Christchurch represents the largest single hotel transaction, by room count, completed in New Zealand over the past 18 months.