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Industrial property has been the highest performing commercial property class over the last 15 years in New Zealand, outperforming the returns of the other industrial sectors: office and retail. This consistency and Provincia’s track record for delivering industrial property investment returns means we can provide strong, reliable performance for investors.
Without the volatility of other investment classes, industrial property is an attractive investment option.
*Source: Morgan Stanley Capital Index (MSCI) – as at December 2020.
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I’ve had a lot of experience in industrial property. When I saw the approach Carl and Jack were taking, I was excited to help navigate their next phase of growth.
MALCOLM MCDOUGALL
Chair / Director / Investor
Industrial Property Investment is in a class of its own
Analysis of industrial property investments in New Zealand demonstrates that returns outperform all other commercial property sectors.
Industrial properties, that is, property used for manufacturing, processing, and warehousing purposes require tenants to invest into machinery, equipment, warehousing systems and more, which are well considered investments to future-proof their business. In doing so, industrial property tenants tend to opt for longer term leases, with average tenures exceeding those of their office and retail components.
Retail and office property portfolios can be more susceptible to vacancies in an economic downturn, demonstrated recently with government-imposed lockdown, and the flow-on effect on retail and office demand. Retail shops can be replaced by online stores, driving the need for warehousing – a continuing trend. In the office-investment space, hybrid or flexible working arrangements have meant people are able to operate from home, partly reducing or removing the need for office space.
Demand for well-located factories and warehousing continues through most economic climates and cycles because industrial buildings house businesses that are essential to everyday kiwi life.
Share Price History
*Source: Morgan Stanley Capital Index (MSCI) – as at December 2020.
Quality Property Portfolio
We invest in quality mid-sized ($5-10 million) industrial properties located in growth areas that have stable economics, with some of the lowest vacancy rates in New Zealand. It also pays to remember that even during economic downturns, commercial spaces such as shops and offices may close or cut back, however, our country will always rely on factories and warehouses, so it makes sense that industrial property investment is one of the most sound investments you can make.
Strong Cash Returns
We understand the importance of a regular cash return. Over the last three years we have enjoyed a 6.2 % pa average pre-tax cash yield (2019 to 2021 based on capital invested). The majority of our tenants are ‘Essential Services’ businesses which continue to operate through any economic climate, helping to provide consistent, strong returns on our client’s industrial property investment.
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Total Fund Performance
Provincia has returned strong reliable cash returns as well as consistent share price growth since the inception of the fund in 2017. The quality of our properties, benefits of our open-ended PIE fund, and a 13.9% pa average total return (cash + capital) from 2019 to 2021, demonstrate our success.
FAQs
If you wish to sell your shares, we have a secondary market available for private offers. This provides improved liquidity for you. All investors have easy access to their full investment details through the Syndex Investor Portal and improved liquidity through the Secondary Market. This can facilitate the sale of your shares to another investor who wants to top up their industrial property investment.
Provincia is a PIE (Portfolio Investment Entity) fund, which means we will take care of the tax for you. When dividends are paid the tax is deducted according to your PIR (Prescribed Investor Rate). Another benefit of a PIE fund is that other tax deductions like depreciation are taken into account when calculating the investors tax, which may lower the effective tax rate you pay. Additionally, the tax rate for Provincia dividends is capped at maximum 28%, no matter what your PIR rate is.
You must qualify as a Wholesale Investor (as per Financial Markets Conduct Act 2013, section 3) to invest in Provincia. Wholesale investment offers are aimed at experienced investors and broadly speaking, are people or organisations who have sufficient previous investing experience and therefore can understand the investment and assess risks.
Wholesale investment offers are not regulated in the same way as Retail Investment offers, however the offeror must still comply with ‘fair dealing’ requirements. This means the person making the offer cannot engage in misleading or deceptive conduct in relation to the offer, make false or misleading statements in their offer documents or advertising or make unsubstantiated representations.
There are several ways to qualify as a Wholesale Investor based on investing experience, business background and your financial position. You may have to get a certificate from your Financial Advisor, Lawyer or Accountant to prove you pass the criteria to qualify, this is called an Eligible Investor Certificate.
Wholesale Investor Qualification is part of our application process and is covered in the application form.
Wholesale investments rules are governed by Financial Markets Conduct Act 2013, section 3.
For further information here is a link to the Act: https://www.legislation.govt.nz/act/public/2013/0069/latest/DLM4092369.html
The minimum investment with Provincia is $50,000 provided you qualify as a Wholesale Investor.
We have an experienced property acquisition team who perform a thorough due diligence process before purchasing a property. We have a 37 point pre acquisition due diligence process that every property goes through so that we identify opportunities and eliminate risks. We focus on sites with value-add opportunities and growth area locations for our industrial property investment.