Stride plans $43m redevelopment for Waste Management
Stride Property Group plans to spend $43 million transforming an Auckland bottling plant into a logistics site for the country's biggest rubbish collection and recycling firm, Waste Management NZ.
The property company wants to finish the redevelopment in the September 2019 quarter, after which Waste Management would sign up to a 25-year lease, generating initial net rental income of $3.89 million with structured growth built into the agreement, meaning it should break the $100 million mark for Stride over the lifetime of the contract. The agreement also caters for additional work to expand the scope of works by up to $23 million, which would lift the rent.
"We are delighted to be working with a great customer to deliver an outstanding real estate outcome for both parties," Stride Investment Management chief executive Philip Littlewood said in a statement. "This is another example of Stride creating great places that are well located and that meet our customers' long-term requirements."
The deal follows the company's sale of three Bunnings properties last week to Stride-managed Investore Property, which it spun out as a standalone entity last year to hold large format retail sites.
The development is subject to Overseas Investment Office approval and resource consent and, once it's done, would increase the weighted average lease term for Stride's portfolio to more than six years from the current 4.9 years.
Waste Management is owned by China's Beijing Capital, which bought it for $950 million from ASX-listed CleanawayWaste Management (then called Transpacific) in 2014. The rubbish collection company generated a net profit of $11.5 million on revenue of $455.4 million in calendar 2016 and spent $12.4 million on operating leases and rental costs. As at December 31, 2016, it had lease commitments totalling $44.8 million, half of which were between one and five years.
Stride shares rose 1.2% to $1.68, having declined 6.2% so far this year.