Why is Kiwi Property selling Northlands in Papanui for $87 million less than its 2019 valuation?

Kiwi Property Group owns Christchurch Mall, which was valued at $247 million three years ago, sale Now it’s just $160 million.

Kiwi, however, is outdated at Papanui Mall’s $247 million valuation.
From 2019.

It was removed after Herald questioned the figure on the NZX-listed company’s website.

A spokeswoman said: “We will be making changes to our website to avoid confusion.

A spokeswoman said Kiwi had not valued the mall for three years because it was for sale. But that value has dwindled since 2019, when Christchurch retail rebounded after the earthquake and he returned to the CBD.

“Northlands’ valuation has been declining from its peak to the number the center has now conditionally sold,” a Kiwi spokesperson said today.

A Queenstown-based privately owned real estate syndicator and manager is buying the mall.

Hamish Wilton, chief executive of buyer Mackersy Property, said his company had already issued an information memorandum of understanding, offering a 10% annual return to wholesale investors who invested in Christchurch’s Northlands shopping centre. said to be predicting

Kiwi said this week it plans to sell its large center to a real estate investment and management business in a deal that will settle in November.

Kiwi said Northlands had 121 tenants, 1,663 parking lots, net operating income of $19.1 million, and annual sales of $286.5 million.

The mall at 43 Langdons Rd will be sold to MP Holdings 5, which is managed by a private syndicator managing the $2.15 billion property.

Only wholesale investors can purchase the private investment fund. They must be professional investors who cannot put in less than $100,000.

Kiwi agreed to put $9 million of the $160 million in proceeds from the sale into a lawyer’s trust account to pay for the completion of seismic work at Hoyts Cinema after the sale.

Kiwi said it has about $32 million in proceeds from Northlands earthquake insurance and is not being used for assets.

The sale requires two conditions. The landlord agrees to transfer part of the parking lot to the leasehold and the New Zealand Board approves. Land leases are owned by private landlords.

The sale is expected to be settled by November 30th.

Kiwi will continue to manage Mackersy’s center and has also agreed to provide up to $75 million in vendor financing to settle the purchase if necessary.

Wilton said the Christchurch property wasn’t the biggest purchase the company had made.

It was Spark Central in Wellington. bought $197.5 million in 2019. Mackersy Property has formed an investment group to buy the office building, Wilton said.

Regarding the purchase of Northlands, Mackersy said it already had the funds to settle and Wilton was planning to do so.

“We have already raised funds from a private investment group to purchase this center.”

Asked about the discounted selling price to book value, Wilton said it was the result of successful negotiations.

This is the third largest group in our 30-year history and the second largest single asset. “

An information memorandum has been issued for investors. It was dated August 24th.

Wilton said a return of 10% was projected, but additional funding will be set aside for capital expenditures and reserves.

A spokesman for Kiwi said after the Canterbury earthquake, retail in Christchurch had moved from the badly damaged CBD to shopping centers in suburbs, including Northlands.

“In parallel, a significant portion of the city’s population has moved outwards, resulting in an increase in the catchment area immediately surrounding the center. .

“There have been many changes since then, such as the resurgence of Christchurch’s CBD and a global softening of capitalization rates for retail real estate assets. As with appraisers, Northlands’ valuations have been declining from their peak to the numbers the center is now conditionally selling,” the spokesperson said.

This shift in Christchurch retail reflects the importance of Kiwi’s mixed-use strategy and the establishment of strong, high-quality retail in strategic locations such as Sylvia Park, Lynn Mall, The Base and, ultimately, Drury. He emphasized the importance of maintaining the center.

“We believe these assets will continue to perform well over the long term and benefit from the flight to quality seen in the retail sector.”

The sale was handled by Colliers’ Richard Kirk and Mark McAuley, he said.

The Mackersy Property business’s largest group of investors owns a portfolio of 32 buildings in Tauranga and Hamilton, primarily industrial, but with some large retail and office buildings.

Mackersy announced on September 2 that it has appointed former commercial real estate and construction attorney Wilton as its new chief executive officer.

However, the announcement was outdated. The appointment was actually he made on April 1st. Asked about the five-month blank period, Wilton said the business is private and under no obligation to disclose information to the public about such appointments. At his April appointment, he said the information was made available to all major stakeholders. It was also posted on the company’s website.

Wilton has worked at Mackersy Property for 10 years, 6 of which as a director. Andy Evans is the chairman of Mackersy.

Mackersy has 120 syndicates that manage commercial, retail and industrial properties, including the Waikato Regional Council building in Hamilton, the new Countdown distribution center under construction in Rolleston, and about a dozen other supermarkets (mainly Countdowns). increase.

The business has offices in Queenstown, Tauranga, Christchurch, Hamilton and Dunedin.

Colliers’ Kirk said of the sale price: How many shopping centers in New Zealand. None over $100 million I can think of.

“Changes to the Seismic Law have also had an impact. However, the final price achieved has been a very positive result for New Zealand, facilitating the many development plans they have in Sylvia Park and elsewhere. And it’s also a good investment…a buyer,” Kirk said.

Kiwi has been wanting to sell for a while, but “eventually, the price reached a level where investors were motivated. Ultimately, other parties were looking for the property.” Kirk said.

Kiwi shares are trading at around $1.01 today and have a market capitalization of $1.59 billion.