Chris Hutching
Friday 23rd April 2004 |
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The contract is unconditional and settlement is due in late May.
The centre is in the heart of Napier central business district and ripe for redevelopment.
The acquisition mirrors another similar purchase by the trust of the Goddard Centre in Tauranga, which it is refurbishing and enlarging.
But the chairman of the National Property Trust management company, Paul Dallimore, said targeted acquisitions had to fill certain criteria.
For example, National Property Trust was unlikely to be interested in The Plaza in Hastings, which is back on the market after a sale fell through.
"It's all about location and Ocean Boulevard gives us the opportunity to add value [by redeveloping]," Mr Dallimore said.
"Hawke's Bay, like Tauranga, is enjoying strong economic growth.
"There aren't many opportunities to buy established shopping centres and that's another reason we're looking at the provinces."
A manager with a rival shopping centre chain said regional centres generally enjoyed strong cash flows, even if capital growth was sometimes constrained.
Ocean Boulevard has 27 tenancies, including a small foodcourt, and 120 carparks over two upper levels.
It has a passing rental return of 10.6%, increasing to 11.5% when the vacant areas are leased.
National Property Trust is considering redevelopment proposals and will release details soon.
Meanwhile, the units in the trust are trading at a healthy 97c, compared to net asset backing of 98c a share.
However, the share price may be under pressure depending on the outcome of whether Mr Dallimore's management team can make suitable arrangements for the placement of 15% (15.46 million units) of the trust held by Metropolitan Life Assurance Company of NZ.
The fund manager has "given the manager of the National Property Trust an opportunity to arrange the placement to third parties of all of the units held by Metropolitan," which "has also agreed not to exercise its votes on those units to remove the manager."
The 15% stake is a hangover from the purchase of the Newmarket Property Trust a couple of years ago, which involved a swap of National Property Trust units for Newmarket units.
Metropolitan was a key stakeholder in Newmarket, facilitating the takeover, but it is now looking cash up.
Under the arrangements it is not intended that the National Property Trust manager (Mr Dallimore and his team) will have the right to act as the agent or attorney to sell the units.
Metropolitan will make the final decision on the price, terms and conditions and person or persons to whom the units are sold but the manager has the right to be consulted over the sale, the Stock Exchange said recently.
For the six months ended November 30, 2003, the trust achieved an unaudited net surplus after tax of $3.203 million ($1.944 million in the previous corresponding period).
Total income rose from $5.316 million to $8.935 million reflecting increased activity from the consolidation
of the results of the Newmarket Property Trust and the redeveloped Eastgate Shopping Centre.
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