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Syndicates take big share of commercial purchases

Investors thinking about joining up with a property syndicate can rest assured that New Zealand syndicates have been keeping busy of late.

Friday, March 13th 2020, 6:01AM

by The Landlord

New research from Colliers International shows that syndication companies were the second largest purchaser group for commercial and industrial property sold for $5 million and over in 2019.

It seems that while local private investors remain one of the most active purchaser groups in New Zealand, the syndication sector’s presence has increased strongly over the past few years.

Colliers research and communications director Chris Dibble says annual sales results are still provisional due to lags in official data reporting, but they can see that syndication companies accounted for 21% of $5 million plus sales.

The syndication sector has been particularly active in the commercial office and industrial space.

According to the research, approximately $1.5 billion of investor funds has been collected for various commercial and industrial property schemes across New Zealand between 2016 and 2019.

Dibble says the syndication sector has fared well on the back of a well-positioned commercial property sector.

“Asset prices have risen steadily over the last few years driven by solid occupier fundamentals, low interest rates and competition for a limited supply of properties available to purchase.”

The ability of syndicators to tap into a wide and varied source of funds from investors continues to be a key driver of ongoing activity, he says.

“Given the high levels of syndication activity already this year, and the outlook for low interest rates to continue, we expect syndicators will remain active in 2020.”

Looking ahead, Dibble says that the low interest rate environment is also likely to have an impact on projected pre-tax cash returns advertised for future schemes.

“The reduction in interest rates has been a key driver of asset value growth and yield firming over the past few years. Syndicators have had to follow suit to remain competitive, impacting the level of returns to be able to be distributed to investors.”

However, the current level and pace of take-up in schemes by investors, despite the potential for the projected returns to move lower, means they expect that demand will remain solid, Dibble adds.

“Given short-term volatility in economic and financial markets at the moment, popularity will be high for schemes with sensible returns, low risk attributes and strong tenant covenants.”

Tags: Colliers commercial property interest rates investment property investment syndicates

« More growth for co-working office spaceCommercial sector facing hundreds of millions in lost revenue »

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AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.14 6.75 ▼6.39
ANZ 8.64 7.74 7.39 7.25
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
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ASB Bank 8.64 7.14 6.75 ▼6.39
ASB Better Homes Top Up - - - 1.00
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BNZ - Green Home Loan top-ups - - - 1.00
BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
BNZ - Std, FlyBuys 8.69 ▼7.74 7.39 7.25
BNZ - TotalMoney 8.69 - - -
CFML Loans 9.45 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - ▼6.79 - -
Co-operative Bank - Owner Occ 8.40 ▼6.99 6.79 6.65
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 ▼7.49 7.29 7.15
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
First Credit Union Standard 8.50 7.99 7.85 -
Heartland Bank - Online 7.99 6.89 6.55 6.35
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 ▼6.69 6.59
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Kainga Ora 8.64 7.79 7.39 7.25
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 ▼7.99 7.79 7.55
Kiwibank - Offset 8.50 - - -
Kiwibank Special - ▼6.99 6.79 6.65
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 7.75 7.35 -
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Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
Resimac - LVR < 80% 8.84 8.09 7.59 7.29
Lender Flt 1yr 2yr 3yr
Resimac - LVR < 90% 9.84 9.09 8.59 8.29
Resimac - Specialist Clear (Alt Doc) - - 8.99 -
Resimac - Specialist Clear (Full Doc) - - 9.49 -
SBS Bank 8.74 ▼7.74 7.29 6.59
SBS Bank Special - ▼7.14 6.69 5.99
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 ▼6.14 - -
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TSB Bank 9.44 7.79 7.55 7.45
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Unity 8.64 6.99 6.79 -
Unity First Home Buyer special - 6.55 6.45 -
Wairarapa Building Society 8.60 6.95 6.85 -
Westpac 8.64 7.89 7.35 7.25
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - 7.29 6.75 6.65
Median 8.64 7.21 7.29 6.65

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