Pie bakery puts meat into fund
The substantial premises containing one of New Zealand’s largest pie manufacturers is the latest asset added to a fast-growing property fund set up to purchase low-risk commercial real estate assets.
The 5439sq m industrial bakery in Silverdale, northern Auckland, is home to the well-known piemaker Dad’s Pies, which was acquired by Australian-owned Allied Foods late last year.
The property at 57 Forge Rd has been purchased by First Light Capital Ltd to add to its First Light Property Fund Ltd investment vehicle, which has a projected pre-tax cash return of 6 per cent for the 2023 financial year and a weighted average lease term of 5.7 years.
The plant consists of some 2500sq m of warehouse and manufacturing facilities, a 157sq m cafe-retail outlet and 157sq m of offices. The premises was purpose-built in 2002 and expanded in 2006.
Dad’s Pies is on a lease running through to 2030 with three further five-year rights of renewal – generating a current annual net rental of $631,770.
Plans are in place for potential expansion at the site, with Dad’s Pies holding the lease to a neighbouring 3000sq m warehouse. A consented connection already exists between the two separately owned facilities.
The Silverdale premises complements the fund’s other commercial property assets:
■ 233 Collingwood St, Hamilton, 2152sq m of freehold land and a 1720sq m building.
■ 2 Harris Rd, East Tamaki, a 1515sq m two-storey office complex on 2819sq m of freehold land.
Within the established tenancy schedule of the two cornerstone fund properties are insurance companies NZI and Aon, Bayleys Real Estate and WorkSafe NZ.
First Light Capital director Toby Hunn says the Silverdale acquisition diversifies the fund’s investment by both asset class and geographic location, and reflects the company’s intention to operate an ‘open-ended’ fund continuously raising capital as its asset base increases.
“With a long-term vision and model, the fund is designed to provide investors with access to a diversified portfolio of what will be made up of New Zealand industrial and commercial properties.”
First Light Capital CEO Shane Scott says: “The principal objective of the fund is to allow shareholders of the fund to collectively invest in New Zealand industrial and commercial properties located in growth sectors of New Zealand in order to derive investment returns which are closely correlated to returns those investors would have derived had they invested themselves … but with the benefits of scale and portfolio diversification.”
Hunn says the acquisition will allow the fund to maintain its annual net pre-tax cash dividend of 6 per cent with dividends paid monthly.
First Light Property Fund Ltd is a portfolio investment entity (PIE) for tax purposes – meaning that investors benefit directly from the fund’s tax deductions and are taxed at their applicable tax rate capped at 28 per cent.