Caniwi Capital in $57m purchase of Inghams properties from US investor
Wellington property investor Caniwi Capital has bought and leased back seven of nine New Zealand properties housing Inghams Enterprises chicken farming operations in a $57 million deal that releases capital for Texas Pacific Group, the US private equity firm that paid A$880 million for the Australasian Inghams operation in March last year.
The transaction represents the New Zealand leg of TPG's plans, announced in March this year, for the sale and leaseback of A$650 million of Inghams properties in Australia and New Zealand.
With a portfolio of New Zealand properties worth some $210 million after the Inghams transaction, Caniwi specialises in very long term leased properties, taking a greater interest in the quality of leasehold arrangements and cashflows than traditional commercial property investors, who are generally more attracted to shorter leases and property valuation.
Inghams will continue to operate the facilities and has leased them from Caniwi for an initial term of 25 years with rights of renewal for a further 50 years. The properties are located largely in the rural areas around the Waikato region.
"The common theme in the assets acquired by Caniwi is exceptionally long term leases with annual rent increases linked to (inflation) with high quality tenants," said Caniwi chairman Troy Bowker. Caniwi's weighted average lease term (WALT) of 19 years represented a low risk investment philosophy and is in tune with other assets in its portfolio, including a newly renovated office building in Tory Street Wellington leased to ANZ Bank on a new 12 year lease, a student accommodation building in Boulcott Street, Wellington, leased to Victoria University on a 15 year lease, and two chicken processing plants leased to Tegel on 25 year leases.
Bowker told BusinessDesk that Caniwi has no plans "at this stage" to take its offering public, and is pursuing a strategy for earnings "more in common with a structured bond investment."
"You never rule anything out," he said of future plans for Caniwi, which he established four years ago after returning to New Zealand from an international banking career. "But our gameplan hasn't changed. We will just keep on acquiring these really solid long term leases. We believe there's some arbitrage."
However, the prices on available transactions in Auckland were "fairly toppy", while the company's focus on long term leases meant that "provincial locations are providing good buying opportunities."