Kiwi Property has agreed to acquire a 50 percent interest in The Base shopping centre at Te Rapa, Hamilton, from The Base Limited (TBL), a subsidiary of Tainui Group Holdings (TGH) for $192.5 million.
Kiwi Property has also made an offer to acquire the balance of The Base for a further $197.5 million (in cash and shares), which will be reviewed by TGH and Waikato-Tainui in the weeks to come.
The purchase price for the initial 50 percent interest includes approximately 6.7ha of vacant land suitable for future development. The initial yield on the purchase price is approximately 6.1 percent, with settlement scheduled for 31 May 2016.
According to it CEO Chris Gudgeon, this acquisition will give Kiwi Property’s investors an ownership stake in New Zealand’s largest, single-site retail centre and aligns with its strategy of owning dominant regional shopping centres.
Ownership of The Base will be by way of a 50/50 joint venture with TBL. Kiwi Property will manage the property for the joint venture.
Under the terms of the agreement, Kiwi Property will acquire a 50 percent interest in 120-year ground leases over the land. The ground rents are prepaid and therefore no further ground rents will be payable. There will be no change to the freehold title to the land, which will remain in the ownership and protection of Waikato-Tainui.
In the event that TGH does not accept the offer for the additional 50 percent interest under the terms of the joint venture and if circumstances change such that Waikato-Tainui decides to sell its remaining 50 percent interest in the future, then TBL has the right to require Kiwi Property acquire its remaining 50 percent interest at a price determined by independent valuation between 2018 and 2021.
Gudgeon said: “The acquisition of the initial 50 percent interest in The Base is unconditional and committed. However, Kiwi Property has provided TBL with an offer to acquire its remaining 50 percent interest. We understand that TGH will be asking the tribal parliament along with the executive committee of Waikato-Tainui to make a decision on this offer. The offer will remain open for acceptance until 17 May 2016.”
Should TBL choose to accept Kiwi Property’s offer to acquire the remaining 50 percent, a further cash payment of $122.5 million will be made and TBL will also be issued 54,347,826 new Kiwi Property shares at $1.38 per share, pricing the 100 percent interest at $390 million. Settlement of the remaining 50 percent interest, should it be accepted by TBL, is also scheduled for 31 May 2016.
As the country’s largest, single-site retail centre, with a land area of approximately 30ha, The Base comprises a modern, integrated complex of speciality and large format retail featuring high-quality design and construction.
With a total retail floor area of 85,256sqm and over 190 tenancies, The Base comprises 53,876sqm of large format retail together with the 31,380sqm enclosed Te Awa Mall and 3,343 car parking spaces. Te Awa Mall, completed in 2011, is anchored by a two-level Farmers department store and a six-screen Hoyts Cinema. The large format retail component, constructed in two stages between 2005 and 2014, is anchored by The Warehouse and Mitre 10 Mega.
Kiwi Property Group, the country’s biggest listed property investor by market value, sold the southern part of its recently developed downtown Hamilton shopping centre (11,000sqm of retail space, including Farmers and 27 other retailers) in the middle of Hamilton city to an undisclosed local buyer for $46.7 million, a three percent discount to its book value.
The sale of Centre Place South was conditional on the issue of updated unit titles and Hamilton City Council consent to transfer two ground leases.
The sale, brokered by Colliers International, is anticipated to be complete by mid-2016.
Kiwi Property will retain Centre Place North and continue to manage the entire centre. The proceeds will go towards repaying debt.
Formerly called Downtown Plaza, Centre Place South was given a $36 million refurbishment and linked to Centre Place North in 2013.
According to the company’s annual reports, the centre has been contending with competition for quite some time.
