Commercial

PMG to buy two substantial properties

Bethlehem Town Centre and a Wellington industrial property are being bought by the unlisted property funds manager for a total of $107.5 million.

Sunday, June 20th 2021

The two properties, bought by Tauranga based unlisted funds manager PMG, are for PMG’s Generation Fund, which has five commercial properties within the country’s main metropolitan areas.

Following the acquisition of the two properties, the total portfolio will be valued at $166 million.

PMG CEO and director Scott McKenzie says the two properties have a high occupancy rate and are leased by recognised national and multi-national tenants.

Bethlehem Town Centre on the outskirts of Tauranga is a high profile, large format retail property and is owned by a Canadian pension fund and a private New Zealand family. It is managed by AMP capital.  

It has 54 tenants spread across 21,006m². They include Kmart, Countdown, BP, Smiths City and Chemist Warehouse and service just under 100,000 people living in the town centre’s main trading area.

The industrial property at 11-13 Gough Street, Seaview, Wellington is leased by Asmuss & Co. A privately owned supplier and distributor of steel in New Zealand, its previous clients and projects include Fonterra and the Forsyth Barr Stadium in Dunedin.

Asmuss was founded in 1920 and has leased the property for more than 20 years, making it an excellent prospect for investors, says McKenzie. 

He adds, the Wellington property will also provide additional rigour and diversity to PMG Generation Fund’s portfolio.

Founding director and chairman, Denis McMahon says the quality and scale of the two intended acquisition properties align with the fund’s strategy – to grow a portfolio of strategically selected assets that provide building, tenant, sector and geographic diversification.

“As a long-term investor we are always looking to acquire assets that will stand the test of time due to their location, build quality, lease profile and their ongoing attractiveness to quality tenants.

“Bethlehem Town Centre satisfies all those criteria.”

PMG’s connection to Tauranga and more specifically Bethlehem, is further strengthened by non-executive independent director Dr Wayne Beilby’s association with the area.

“Bethlehem, or Te Paeroa as it’s known to local iwi, is in my own backyard, my rohe, and I’m thrilled PMG is set to secure such a promising asset.”

PMG is one of New Zealand’s largest unlisted commercial property funds managers and was founded in the Bay of Plenty in 1992.

It manages five unlisted funds with commercial property assets worth more than $750 million.

The Generation Fund was launched in 2020 with the aim of helping more New Zealanders gain access to the benefits of investing in commercial property. It provides regular income and the opportunity for capital growth.

“Historically low interest and term deposit rates mean investors are actively looking elsewhere for compelling returns and post-Covid, the commercial property market is stronger than ever, providing a source of secure and steady income,” says McKenzie.

“New Zealanders appreciate the security of land, bricks and mortar, however growing regulatory and tax headwinds for the residential property market is now making commercial property a more sought-after investment option.

“PMG’s last two investment offers in two of its funds were fully subscribed well before the offer close dates.

“Not only are we seeing more demand from investors in our funds, it is coming faster and in larger parcels.”

PMG is offering investors between 63 and 69 million units ($68.67 million to $75.21 million) at $1.09 per unit in the PMG Generation Fund.

It comes with a minimum investment threshold of 1,000 units ($1,090) and parcels of 1,000 units thereafter.

McKenzie says since its inception, PMG Generation Fund has delivered a gross cash distribution return of 5.80 cents per unit to its original investors and has seen a significant increase in the value of its underlying property assets.

With a forecast gross cash return of 5.5% pa, paid monthly, this offer delivers an attractive passive income.

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