CENTRE PLACE SOUTH HAMILTON NEW ZEALAND
Introduction & sale process
4
Executive summary
6
Investment background
8
Location 11 Hamilton city
12
Hamilton by numbers
13
Financial summary
14
Property description
16
Site & legal description
18
Body corporate overview
18
Construction / refurbishment
21
Carparking 22 Tenant directory
24
Planning 26 Management 26 New Zealand investment market
28
Due diligence & data room access
30
INTRODUCTION & SALE PROCESS Colliers International Limited has been exclusively appointed by Kiwi Property to market for sale by way of International Private Treaty, Centre Place South, corner Ward Street and Worley Place, Hamilton. Offers are to be lodged at the offices of Colliers International, Level 27, 151 Queen Street, Auckland by 4pm 12 March 2015. This Information Memorandum provides preliminary information to assist interested parties with their assessment of the property. Further information is available via an online data room which can be accessed upon execution of a Confidentiality Agreement. All enquiries are to be directed to the sole agents, Colliers International Limited: John Goddard Mobile: +64 21 947 566 john.goddard@colliers.com Andrew Reed Mobile: +64 21 441 303 andrew.reed@colliers.com Mark Brunton Mobile: +64 27 4943 050 mark.brunton@colliers.com
Centre Place South, Hamilton | 5
EXECUTIVE SUMMARY DESCRIPTION Centre Place Shopping Centre (the Centre) consists of two components, Centre Place North (CP North) and Centre Place South (CP South), which are separated by the recently pedestrianised Ward Street. CP South is being offered for sale by way of International Private Treaty closing 4pm, 12 March 2015. CP South comprises a fully enclosed centre of 10,933m² originally constructed in 1994. The specialty retail component (27 tenancies) is arranged over a single level, with escalator access to a basement carpark. The Farmers tenancy constitutes a two level department store of 7,144m² which was redeveloped for the tenant. Farmers have taken a 15-year lease, which commenced in October 2013. The basement carpark is under separate ownership. LOCATION CP South is situated in the heart of the Hamilton Central Business District in a block bounded by Ward Street, Anglesea Street, Worley Place and Garden Place. The location has one of the highest pedestrian counts in the city. The Centre benefits from the high profile obtained from a prominent corner position, and high vehicular traffic flow along Anglesea Street, which is one of the main routes through Hamilton City. The CBD is bordered by the world-renowned Seddon Park cricket ground, the premier rugby, and football ground of Waikato Stadium, Waikato Institute of Technology’s (Wintec) central campus and the Waikato River.
6 | Centre Place South, Hamilton
Centre Place South, corner Ward Street and Worley Place, Hamilton, New Zealand Site area
12,280m²
Interest
Freehold in Stratum
Net Lettable Area
10,933 m²
Net Passing Income
$3,859,335
WALT
8.3 years*
Occupancy
100%
Carparking
Approximately 1,000 spaces for the total Centre.
Zoning
City Centre – Hamilton City Council Operative Plan July 2012 Central City – Hamilton City Proposed District Plan
Seismic rating *as at 31 March 2015
A
Centre Place South, Hamilton | 7
INVESTMENT BACKGROUND AN OUTSTANDING LOCATION AND STRATEGIC POSITION
CP South is located in the heart of Hamilton’s CBD in the Waikato region. Hamilton is New Zealand’s largest inland urban centre, and the Waikato is one of the country’s leading agricultural regions. Hamilton’s CBD is the region’s premier business, entertainment and shopping precinct and is home to 1,200 business and property owners. One of the highest pedestrian counts in the city is recorded outside CP South. A TRANSFORMATIONAL REDEVELOPMENT
A recent redevelopment ($25 million for CP North and $36 million for CP South), has repositioned Centre Place as Hamilton’s leading CBD fashion, food and entertainment precinct. The redevelopment of the centre involved a new department store, two state-of-the-art cinema complexes, a revitalised food court and a dining lane experience with outdoor seating options. STRONG NATIONAL TENANT LINE UP
The recent refurbishment attracted a host of wellknown brands, including Stewart Dawson, Acquisitions, Michael Hill, Maher Shoes, Merric, Valleygirl, Temt and Barkers making CP South the premier retail fashion precinct in Hamilton’s CBD. CP South is anchored by a flagship Farmers department store, New Zealand’s most recognised and respected department store brand. CP North (not offered for sale) complements CP South’s retail offering with two state-of-the-art cinema complexes METRO by Hoyts and Lido, mini majors including Rebel
8 | Centre Place South, Hamilton
Sport, Dick Smith Electronics and Whitcoulls and an extensive foodcourt and dining lane, cementing Centre Place’s reputation as one of Hamilton’s most popular entertainment destinations. HIGH POPULATION GROWTH EXPECTATIONS
Hamilton is home to 153,100 people, making it New Zealand’s fourth most populous city and is the third fastest growing urban area in New Zealand, with an estimated population growth rate of 1.3% per annum through to 2031. STRONG REGIONAL GROWTH
Given the suitable geography and climate, the wider Waikato economy is based on agriculture, especially dairy, which has benefited from the strong global increase in demand for dairy products. From 2004 to 2007, real gross regional product for the Waikato Region increased by 5% per year compared with 3.2% for the national average. This increase in growth can be attributed to the rapidly growing dairy and business service industries, facilitated by proximity to Auckland City, the main international gateway to New Zealand. FARMERS DEPARTMENT STORE
This highly successful department store anchors the centre. Farmers operate 56 stores across New Zealand specialising in fashion, beauty, homewares, furniture and a wide range of electronics and appliances. The company was founded in 1909 and today is privately owned by the James Pascoe Group.
‘BEST IN CLASS’ MANAGEMENT
Management of the Centre can be provided by Kiwi Property, New Zealand’s largest listed property company. Kiwi Property’s asset management team is completely ‘in-house’ with their own retail leasing executives, centre managers, marketing, promotional leasing and brand space managers, development managers and facility managers, providing ‘best in class’ management services focused on delivering both income and capital value growth. SEISMIC ANALYSIS
There are two main structures within CP South, being the block housing the 27 specialty tenancies, and the recently completed block housing the Farmers department store. CP South has an assessed IEP rating of ‘A’. The assessment has been made in accordance with the NZSEE IEP procedures. ATTRACTIVE INVESTMENT OPPORTUNITY
CP South’s credentials are second to none. Anchored by Farmers, New Zealand’s most iconic department store, with over 13 years left to run on a 15 year lease. CP South’s WALT stands at 8.3 years.
• A WALT OF 8.3 YEARS • ANCHORED BY FARMERS ON A LONG TERM LEASE • RECENT $36 MILLION REDEVELOPMENT • 100% OCCUPANCY
The Centre is 100% leased to some of New Zealand’s leading fashion brands, with structured growth built into most specialty leases. Retail trading figures have grown strongly following the redevelopment of the centre. CP South represents an opportunity for an astute investor to acquire one of Hamilton’s most attractive retail assets and benefit from the expected continuation in this growth. Centre Place South, Hamilton | 9
KMART
WINTEC
TRANSPORT CENTRE
PWC THE WAREHOUSE
HAMILTON CITY COUNCIL
CENTRE PLACE NORTH
CENTRE PLACE SOUTH
GARDEN PLACE
NOVOTEL HOTEL
SKY CITY
10 | Centre Place South, Hamilton
LOCATION Centre Place is a CBD based shopping centre, located in Hamilton on New Zealand’s North Island. Hamilton is located 127kms south of Auckland in the Waikato region. CP South is at the heart of Hamilton’s CBD, with the Centre attracting the highest levels of pedestrian traffic in the city. CP North and CP South are located on either side of the recently pedestrianised Ward Street. CP South is being offered for sale. Hamilton is strategically situated between the two main sea ports of Auckland and Tauranga and is just over an hour away from New Zealand’s main international airport. The city is serviced with a railway station just a few minutes from the CBD and a modern international standard airport 15 minutes south. CP South is easily accessed from the wider city and region and is well serviced by public transport. Located a short distance from CP South is The Transport Centre, the central hub for all passenger bus services within Hamilton and the Waikato region.
HAMILTON CITY • Hamilton CBD is a bustling retail precinct with a vibrant entertainment area • Hamilton’s GDP is $6.8 bn. Waikato region’s GDP is $17.3 bn (as at June 2013) • The centre of one of the richest agricultural and pastoral areas in the world • The 3rd fastest growing population in New Zealand • A major service centre for the Waikato region - about half of all shoppers are from outside of Hamilton • Hosts the annual National Agricultural Fieldays at Mystery Creek, the southern hemisphere’s biggest agricultural trade exhibition • A solid manufacturing base. Home to New Zealand’s largest aircraft manufacturer and has the largest concentration of trailer-boat manufacturers • A centre of education and research with the University of Waikato and the Waikato Institute of Technology • 20,000 Wintec students are based in the heart of the CBD Source: Hamilton City Council website Source (opposite): Hamilton City Council Website
HAMILTON BY NUMBERS 4th Hamilton is New Zealand’s fourth largest city
150,000 Hamilton has a population of about 150,000 people
Auckland km 127 mins 40 1hr
2,500
HAMILTON
Tauranga
Hamilton’s population is increasing by about 2,500 per year
Rotorua Taupo
$775 million Retail sales are around $775 million a year
50% CBD accounts for 50% of Hamilton’s overall retail spend and about half of all shoppers are from outside Hamilton
Centre Place South, Hamilton | 13
PROPERTY DESCRIPTION CP SOUTH – THE PREMIER FASHION PRECINCT IN HAMILTON’S CBD.
CP South forms the southern portion of Centre Place and is bordered by Ward Street, Anglesea Street, Worley Place and Garden Place. Although CP South is integrated into the wider centre, it remains physically separate with its own freehold titles. CP South comprises a fully enclosed retail centre constructed in 1994. The specialty retail component is arranged over a single level with escalator access to the basement carpark. Note that the basement carpark is under separate ownership. The Farmers tenancy constitutes a two level department store of 7,144m² which was completely redeveloped for the tenant in 2013. A significant refurbishment of CP South was completed in October 2013 at a cost of $36.0 million, which attracted a host of well-known brands for its reopening, including Stewart Dawson, Acquisitons, Michael Hill, Maher Shoes, Merric, Valleygirl, Temt and Barkers. The Farmers department store was redeveloped as part of this refurbishment. Included with CP South are two retail units located on Ward Street of approximately 375m² which house three tenancies. Ward Street was pedestrianised as part of the 2013 refurbishment and forms a covered link between CP South and CP North. The Ward Street retail occupies a land area of 1,731m² which is subject to a ground lease with Hamilton City Council for a term of 999 years commencing 2 October 2012. Ground rent is based on a set percentage of the assessed net income of the Ward Street retail units, rather than land value.
16 | Centre Place South, Hamilton
Centre Place South, Hamilton | 17
SITE & LEGAL DESCRIPTION
BODY CORPORATE OVERVIEW
SITE
GENERAL
The total site area is approximately 12,280m² of which 1,731m² is held under a ground lease to Hamilton City Council.
The Body Corporate for CP South is registered under number 66160. The Body Corporate manager is Crockers.
LEGAL DESCRIPTION
A Supplementary Record Sheet is registered in respect of every unit plan that is deposited with Land Information New Zealand. The Supplementary Record Sheet for the unit titles forming part of CP South is registered under Identifier SA53B/289.
The ownership is primarily Freehold in Stratum. The various title and interests are available for review in the online due diligence room. Kiwi Property has a registered lease of 1,731 m² known as the Ward Street West Pedestrian Area. The lease is for a term of 999 years from 2 October 2012 and provides a pedestrian thoroughfare for the public and users of the shopping centre. Ground rent is based on a set percentage of net income of the Ward Street retail units. Kiwi Property has a registered lease of part of the airspace in the Hamilton City Council Carpark. This was required as part of the redevelopment of CP South. The lease is for a term of 999 years from 24 October 2013. No rent is payable for the lease.
18 | Centre Place South, Hamilton
SUPPLEMENTARY RECORD SHEET
BODY CORPORATE OPERATIONAL RULES
The operational rules for Body Corporate 66160 have recently been reviewed and a new set of rules was registered on 5 November 2014. A copy of the new rules are available in the online due diligence data room.
Centre Place South, Hamilton | 19
20 | Centre Place South, Hamilton
CONSTRUCTION / REFURBISHMENT TRANSFORMATIONAL REFURBISHMENT
A $36 million transformational refurbishment of CP South was completed in October 2013 which repositioned the centre as Hamilton’s leading CBD fashion precinct. The refurbishment works consisted of three sections as follows:
STRUCTURE
i. The addition of a new two level 7,144m² Farmers department store ii. The remodelling of the adjacent specialty retail area to provide 27 stores and common mall area iii. The partial closure and pedestrianisation of Ward Street together with the development of two retail units. The construction of roofing across Ward Street provides a seamless physical connection between CP South and CP North.
SERVICES
Foundations
Shallow pads with concrete slab on grade
Floors
Double tee, hollow core and unispan pre-stressed flooring systems
External walls
The basement walls are pre-cast concrete panels. The building is predominantly clad in Hardiflex high build on steel stud, together with areas of steel span 900 wall claddings
Roof
Long run galvanised steel
Seismic rating
The building has an IEP rating of A. The assessment has been made in accordance with the NZSEE IEP procedures
Air conditioning and heating
The specialty shops and mall entrances are air conditioned using package unit technology with main plant situated in recessed sections of the roof
Vertical transport
Two OTIS passenger escalators service the basement carpark and mall retail level. Additional escalators are situated in the Farmers tenancy
Fire prevention The complex is fully fitted with fire sprinklers, fire hose reels, smoke detectors, emergency lighting, smoke extract ventilation and smoke detectors Security
Full security including detectors both in the mall and at the entrances and comprehensive onsite guarding and monitoring sevices. The mall ceiling is also alarmed
Amenities
Male, female toilets are provided in the centre Centre Place South, Hamilton | 21
CARPARKING Carparking is provided through two carparking buildings: i. A six level carparking building situated in CP North, which is integrated into the shopping centre by way of lift and stair access. The parking building is accessed from Bryce Street and provides approximately 612 carparks, of which approximately 552 carparks are allocated to the shopping centre. ii. A two level carpark located directly beneath CP South which provides approximately 450 carparks. These carparks are currently owned by Hamilton City Council but are available for shoppers and benefit CP South with escalator access directly into the mall. Hamilton City Council currently offers a regime, whereby shoppers can park for free for the first hour. In total approximately 1,000 carparks are available to the entire centre (both CP North and CP South), which equates to approximately 3.43 carparks per 100m² of floor area.
22 | Centre Place South, Hamilton
Centre Place South, Hamilton | 23
TENANT DIRECTORY
VICTORIA STREET
WARD STREET
24 | Centre Place South, Hamilton
CENTRE PLACE NORTH
ANGLESEA STREET
CENTRE PLACE SOUTH
Tenant
DEPARTMENT STORE 1
CENTRE PLACE SOUTH
Farmers
FASHION Backdoor Surf
3
Valleygirl
4
Temt
5
Max
6
Barkers
7
Jean Jones
8
Pumpkin Patch
9
Stewart Dawsons Jewellery
10
Maher Shoes
11
Merric
12
Pagani
13
Bing Harris & Co
14
Colette
15
Merchant
16
Michael Hill
17
Moochi
19
21 23
Yoghurt Story Bill's Subs
20
Sushi Day
21
Sierra Cafe
GENERAL
22
25 9
1
6 10
5
11 12
3 13 2
18
22
Paper Plus
23
Lotsa Goodies
24
Stevens
25
Acquisitions
28 24
4
19
27
7
FOOD 18
20
26
8 WORLEY PLACE
2
ANGLESEA STREET
Shop
17
14
16
15
WARD STREET
PERSONAL SERVICES 26
Edge
27
Once More Massage
28
ProfessioNail Centre Place South, Hamilton | 25
PLANNING
MANAGEMENT
CURRENT ZONING
ABOUT KIWI PROPERTY
The property is zoned ‘City Centre’, under the Hamilton City Council Operative District Plan July 2012.
• New Zealand’s largest listed diversified property entity, with over $2.0 billion of assets in a portfolio predominantly comprising of dominant regional shopping centres and prime office buildings.
The zone recognises the development of the city centre as a significant entertainment, retailing, commercial and cultural hub for the city and the wider Waikato Region. Permitted activities include any retail activity, offices, health care services, restaurants, licensed premises, community centres, apartment buildings, and residential centres. PROPOSED DISTRICT PLAN
The Hamilton City Proposed District Plan was publicly notified on 10 December 2012, with submissions to the proposed plan closing on March 2013. The decisions and appeals process has extended into 2014. The property is located within the Downtown Precinct of the ‘Central City’ zone of the Hamilton City Proposed District Plan, which aims to facilitate the growth of the Central City in a sustainable way and to make the Central City a fun and vibrant place to live, work and socialise.
26 | Centre Place South, Hamilton
• Kiwi Property are specialist retail managers and investors who carry out all asset management services ‘in-house’ with their own retail leasing executives, centre managers, marketing, promotional leasing and brand space managers, development managers and facility managers. • Kiwi Property are the owners of CP North. It is proposed that CP North and CP South remain operating as an integrated centre, post the sale of CP South, with Kiwi Property providing management services for the combined centre from the on-site management office located in CP North. • The proposed management contract for CP South will be on market terms and is available for review in the due diligence data room.
Centre Place South, Hamilton | 27
NEW ZEALAND INVESTMENT MARKET • A benign tax structure with limited property and associated taxes: – no capital gains tax, – no stamp or conveyance duty • Positive migration and demographic profiles • Supportive investment for foreign and local ownership • Favourable current debt to yield spread • Transparent real estate sector; indefeasibility of title • Favourable long-term economic indicators • Solid long-term returns with relatively low volatility • A stable political regulatory environment Official Cash Rates
Inflation Next rev Rate %
Rate %
Last chg %
New Zealand
3.50
unchanged
29 Jan
1.0
Australia
2.50
unchanged
29 Jan
2.3
United States
0.25
unchanged
17 Dec
1.7
United Kingdom
0.50
unchanged
29 Jan
1.3
Eurozone
0.05
unchanged
22 Jan
0.4
Japan
0.00
unchanged
18 Dec
3.2
Source: Craigs Investment Partners
28 | Centre Place South, Hamilton
NEW ZEALAND KEY ECONOMIC INDICATORS – DECEMBER 2014
Jun-13 (yr rate)
2014F*
2015F*
2016F*
GDP Growth
2.5%
3.5%
2.7%
2.0%
Retail Sales (ex-auto)
3.7%
4.2%
5.2%
4.9%
Unemployment Rate
6.6%
5.6%
5.2%
4.6%
Sep-13 (yr rate)
2014F*
2015F*
2016F*
1.4%
1.4%
2.1%
2.1%
16
48
28
16
Retail Sales (ex-auto)
3.3%
4.2%
5.2%
4.9%
Unemployment Rate
6.4%
5.6%
5.2%
4.6%
CPI Inflation Net Migration Gain (000's)
Oct-13 (yr rate)
10 Year Average
2014F*
2015F*
2016F*
90 Day Bank Bill Rate
2.7%
4.9%
3.7%
4.1%
5.3%
10 Year Government Bond
4.7%
5.2%
4.8%
5.5%
5.9%
2015F*
2016F*
2017F*
2018F*
2014F* Exchange Rates USD/NZD
0.791
0.747
0.735
0.724
0.716
Exchange Rates AUD/NZD
0.894
0.854
0.855
0.845
0.834
Exchange Rates GBP/NZD
0.489
0.45
0.448
0.445
0.443
Exchange Rates EUR/NZD
0.62
0.576
0.568
0.565
0.562
Source: Reserve Bank of New Zealand, NZIER forecasts and Colliers International Research. * December year forecast ** ANZ Roy Morgan, average is since inception not 10 year average.
Centre Place South, Hamilton | 29
DUE DILIGENCE & DATA ROOM ACCESS METHOD OF SALE
CONTRACT FOR SALE AND PURCHASE
CP South is offered for sale by way of International Private Treaty closing 4pm on Thursday, 12 March 2015.
A draft contract for Sale and Purchase is available within the online data room.
Prospective purchasers are invited to submit an offer addressed to Colliers International Limited in the form of the Sale and Purchase contract provided within the online data room. Following the close of the ‘Offers to Purchase’ there will be a short assessment period. The Vendor may then decide to progress a sale with one party on an exclusive basis or shortlist multiple parties to confirm their best and final offers. The Vendor reserves the right to amend this process at any time. The Vendor reserves the right to sell the property prior to the closing date of 12 March 2015. DUE DILIGENCE
To assist in the assessment of this offering, comprehensive due diligence information is available via an online data room. Prospective purchasers will be required to sign a Confidentiality Agreement prior to being granted access to the online data room. To receive the Confidentiality Agreement please contact Colliers International Limited. Upon execution of the Confidentiality Agreement we will provide you with a password for immediate access to the online data room.
30 | Centre Place South, Hamilton
CONTACT DETAILS AND INSPECTION ARRANGEMENTS
All enquiries, requests for information and arrangements to undertake inspections in relation to this investment opportunity are to be directed to the sole agents, Colliers International Limited: John Goddard +64 21 947 566 john.goddard@colliers.com Andrew Reed +64 21 441 303 andrew.reed@colliers.com Mark Brunton +64 27 4943 050 mark.brunton@colliers.com
Disclaimer: This document was prepared by Colliers International New Zealand Limited for information purposes only and neither Colliers International New Zealand Limited nor Kiwi Property Group Limited makes any representation or warranty of any kind whatsoever including as to the accuracy or completeness of the information in this document. Opinions including estimates and projections in this document constitute the current judgement of Colliers International New Zealand Limited as at the date of this document and are subject to change without note. Such opinions are not guarantees or predictions of future performance. This document does not constitute advice of any kind. Colliers International Limited, Kiwi Property Group Limited and their respective Board members, officers, employees, advisers, agents or other representatives (together with Colliers’ Associates) will not be liable for any damage, loss or cost incurred by any recipient of this document or other person in connection with this document. In consideration of the Colliers International New Zealand Limited providing or making available (whether directly or indirectly) to the recipient this document the recipient agrees that the recipient will not have any claim against Colliers International New Zealand Limited or any Colliers’ Associates in respect of the use of this document or any of its contents and the recipient hereby releases against Colliers International New Zealand Limited and the Colliers’ Associates from all claims, whether in contract, tort or otherwise in respect of or arising from this document to the maximum extent permitted by law. If a court of competent jurisdiction shall hold Colliers International New Zealand Limited or any Colliers’ Associates liable in respect of this document or any of its contents then such liability shall be limited to NZ$100.
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