Private investors have the opportunity to acquire an institutional grade aged care asset in Havelock North, with a triple net 30-year lease in place to one of the country’s largest providers of residential aged care services.
Waiapu House Lifecare at 10 Danvers Street comprises a purpose-built 75-bed care facility integrated with a small resident-funded retirement village on 2.02ha of General Residential-zoned land close to the Havelock North village centre.
The care facility is leased to and operated by Heritage Lifecare Villages Limited, one of New Zealand’s leading aged care operators which has a more-than 40-strong network around the country with a presence across both North and South Islands.
Heritage Lifecare effectively uses its scale and resources to run its family-focused care homes, with a proven and successful model that has centralised administrative functions and a strong operational focus on resident well-being.
As New Zealand’s population ages, the defensive aged care asset class has found broad traction with listed and institutional investors. Agents marketing the Havelock North property say private investors can now secure a hands-off asset with compelling returns in a sector that benefits from high levels of government funding and can leverage demographic change.
Stats NZ figures show one in 50 people in the New Zealand population are now aged 85-plus and this figure could increase to about one in 30 during the 2030s, and to about one in 20 in the 2040s which highlights the need for ongoing provision of aged care services.
The land and buildings associated with Waiapu House Lifecare are being marketed for sale by Deadline Private Treaty closing 4pm, Thursday 7th December, unless sold prior through Rollo Vavasour, Bayleys Havelock North along with Sunil Bhana and Mike Houlker of Bayleys Auckland.
The offering returns net annual income of $730,496 plus GST and Heritage Lifecare’s 30-year lease commenced March 2022 with rights of renewal until 2112. It is a triple net lease with annual CPI reviews capped at four percent.
In addition to the land and buildings (with gross floor area of 4,366sqm) associated with the care facility component of the property, the landlord also owns the land beneath a range of tenant-owned buildings and amenities co-located on the site.
Vavasour says Havelock North always attracts robust investor attention from outside the area, with 50-60 percent of all commercial property transactions being to out-of-region buyers.
“Hawke’s Bay’s regional economy is historically strong, underpinned by the primary sector, supported by a proactive port, and a buoyant tourism market.
“Havelock North is a thriving, high-decile urban village that is popular with a broad demographic and where commercial property tends to be very tightly held, often inter-generationally.
“It is home to a large proportion of the region’s retirees and aged population, and Waiapu House has been an intrinsic part of the village for more than 50 years.”
Bhana says this sought-after institutional grade investment opportunity within the niche healthcare real estate sector delivers an enviable income stream and offers significant depreciation benefits for the landlord.
“The corporate-style long triple net lease structure transcends the majority of standard commercial leases and investors need to appreciate the compelling fundamentals on offer here,” he says.
“It’s highly unusual to see a 30-year triple net lease for any commercial asset – let alone for a regional offering in an accessible price range.
“A buyer can secure a sizeable asset without needing to be involved with any day-to-day maintenance or operational commitments, have a steady and consistent revenue stream with built-in growth – all underpinned by 2.02ha of coveted residentially-zoned land in a growing region.”
As the population ages, there will continue to be an undersupply of aged care real estate throughout New Zealand. Bhana says recent sales by Bayleys of other Heritage Lifecare-occupied offerings in Tauranga and Palmerston North, demonstrates investor appetite for well-located, well-managed facilities.
Meanwhile, in Invercargill, another Heritage Lifecare-operated aged care facility with the same 30-year triple net lease structure is also for sale.
Located on 1.34ha land of Residential 1-zoned land at 1 Cargill Street in the fringe suburb of Waikiwi, around 4.7km from Invercargill, Cargill Lifecare comprises a purpose-built 40-bed aged care offering resthome level care.
It is also being marketed for sale via Bhana and Houlker, with local input from Michael Frecklington of Bayleys Southland.