Why Invest In Industrial Property

Two men talking on the warehouse production line

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Industrial property has been the highest performing commercial property class over the last 15 years in New Zealand, out-performing the returns of the office and retail sectors*. This consistency and Provincia’s track record in delivering industrial property returns means we can provide a strong reliable return.

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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The Benefits / The Benefits / The Benefits / 

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 is in a Class of Its Own

Analysis of industrial property in New Zealand demonstrates that investment returns outperform all other commercial property sectors.*

Retail and offices are more susceptible to vacancies in an economic downturn which has clearly been demonstrated over the last 2 years with the government-imposed lockdowns. Retail shops are easily replaced by online stores, further fueling the need for warehousing and this is likely to be a continuing trend. People are able to operate from home using technology thereby reducing the need for office space.

Demand for well located factories and warehousing continues through most economic climates because the buildings house businesses that are essential to everyday kiwi life.

Commercial Property Total Returns in New Zealand

*Source: Morgan Stanley Capital Index (MSCI) – as at December  2020.

Slumberzone industrial warehouse

Quality Property Portfolio

We invest in quality mid-sized ($5-10 million) industrial properties located in growth areas that have sound economics. Our properties are located in areas with some of the lowest vacancy rates in the country. When tenants move on, we are confident in being able to replace them very quickly. Also during economic downturns, shops may close down and offices may cut back, but factories and warehouses just keep running.

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 consistant strong returns.

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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

Below are frequently asked industrial property investment questions.

If you wish to sell your shares, we have a secondary market available for private offers. This provides improved liquidity for you. We can also help facilitate the sale of your shares to another investor who wants to top up their 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. 

© Provincia Property 2022
Fund Management LTD

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