To put your money into high yield investments you may have to take on some big risks. This industrial property in Onekawa, Napier is a case in point…
Risk & reward
To get big returns in the current market you need an uncanny eye for high yield investments with value-add opportunities that others have missed. Either that or big cahoonas.
This, in our opinion, is an example of the latter.
Dan Walker, one of the top brokers at Colliers International in Hawkes Bay, sold the high yield industrial investment property pictured above last month.
5 Husheer Place, Onekawa, Napier
- Features: 2,270m² fully leased industrial premises with seismic assessment of 70% of NBS on a 3,018m² freehold site. Leased to Design Spun for 5 years from July 2017 with 2 x 3-year rights of renewal. Final expiry July 2028.
- Rent: $125,000 p.a.
- Outcome: Sold for $1,350,000. The property was put under contract mid-2018 subject to the vendor providing a Building WOF, which took 12 months to complete.
- Yield: 9.3%
Design Spun is one of just two worsted spinners remaining in New Zealand. They make yarns for hand knitting, weaving and textile. They’re a great company but it’s not exactly a growth industry. We would class them as a specialised tenant.
Secondly, the lease comes up for renewal in 3 years. If they decide to move on, or downsize to smaller premises, you are left with a tired old building that suits a specialised tenant, of which there are only two in New Zealand.
Even if they do renew, you’re sitting there watching the clock tick down for another 3 years. It’s a high stakes, nail-biting situation to be in.
At some stage they’ll be gone. What do you do then?
One angle might be to gut the interior and clear it out as much as possible, then find a general industrial tenant. But how many businesses in Hawkes Bay want 2,270m2 in a mishmash arrangement of tired old buildings?
Another option is to split it into multiple tenancies, but have another look at the photo and you’ll realise it’s easier said than done.
Is this one of those high yield investments you’d put your money into?
If you have a high net worth and $1.35 million is just play money for you, then maybe it’s a gamble worth taking.
But if preservation of capital is important to you and you want to be able to sleep at night, a lower-risk investment like Provincia property fund might be more your thing. With 6% quarterly dividends plus capital gains, you get most of the benefits of direct ownership without the stress and headaches of direct ownership.
Find out more about Provincia…
If you’re looking for somewhere safe to park your funds and earn a decent return plus capital gains, find out more about investing in Provincia at our investor information evening on Thursday next week…
WHEN: Thursday 26 September 2019 at 6:15 PM for a 6:30 PM start. Allow one hour.
WHERE: Newland Burling offices, 268 Manukau Rd, Epsom
RSVP: Simply email email@example.com to register for the evening.
- Visit our Provincia property fund page
- Phone +64 9 522-4936 » (click to call)
- Freephone 0800 522-222 » (click to call)
- Email firstname.lastname@example.org
- Or complete the online form below…
This content is provided for general information only and should not be relied upon or used as a basis for making any investment or financial decision. To the extent that any information or recommendations in this content constitute financial advice, they do not take into account any person’s particular financial situation or goals. As individual circumstances differ, we strongly recommend you seek independent legal and/or financial advice prior to acting in relation to any of the matters discussed herein. Neither Newland Burling & Co Ltd nor Provincia Property Fund Management Ltd nor any person involved in this content accepts any liability for any loss or damage whatsoever may directly or indirectly result from any advice, opinion, information, representation or omission, whether negligent or otherwise, contained in this content.